In July, FPIA raised Rs. 32,365 crore in local stocks while in June, they were followed by net sellers in April and May to Rs. 26,565 crore were net buyers, while they respectively accounted for Rs. 8,671 crore and Rs. 25,586 crore equity was sold. In February and March respectively they were Rs. 1,539 crore and Rs. 35,098 crore were net buyers, after starting the year on a negative note in January when they bought Rs. 25,744 crore worth of shares were sold.
On Friday, foreign institutional investors (FIIs) raised Rs. 766.52 crore were net buyers while Domestic Institutional Investors (DIIs) accounted for Rs. 2,606.18 crore were net buyers.
A notable trend in recent FPI inflows, which became more pronounced in August, is continued selling by FPIs through exchanges that continue to invest through the ‘primary market and others’ category, said VK Vijayakumar, chief investment strategist at Geojit Financial. Services said.
He attributed the selling trend to the valuation gap as he said issues in the primary market are at comparatively low valuations while valuations in the secondary market remain consistently high. “Therefore FPIs buy when securities are available at fair valuations and sell when valuations extend in the secondary market,” he added.
“Till August 17, FPIs have sold Rs 32,684 crore worth of equities through exchanges, while investing Rs 11,483 crore in the primary market and other categories. This trend is likely to continue as India is currently the most expensive market in the world and it is the most expensive market for FPIs. It is rational to sell here and move money to cheaper markets, even if the market turns more bullish on fears of a US recession easing, this picture will not change,” said a Geojit analyst.
“The FPI outflows seen on August 24 were mainly driven by a combination of global and domestic factors. Globally, concerns over the discontinuation of yen carry trade, a possible global recession, slow economic growth and ongoing geopolitical conflicts lead to market volatility and risk. Domestically, after being net buyers in June and July, some FPIs may have opted to book profits following the strong rally in the previous quarter.
Meanwhile, Vipul Bhovar, director of listed investments at Waterfield Advisors, sees mixed quarterly earnings and relatively high valuations making Indian equities less attractive. However, they feel that FPI flows into India should continue given India’s strong economic performance including GDP growth, reduced fiscal deficit, manageable current account deficit and strong sector growth and industrial production.
Also Read: Q1 Review: Sub 5% Nifty PAT Growth This Brokerage Downgrades 2% FY25 Earnings
(disclaimer: Recommendations, suggestions, opinions and views given by experts are their own. (These do not represent the views of The Economic Times)
(You can now subscribe to our ETMarkets WhatsApp channel)
