In July, FPIs bought domestic equities worth Rs 32,365 crore, taking the figure to a net purchase of Rs 26,565 crore in June. They continued to be net sellers in April and May, selling equities worth Rs 8,671 crore and Rs 25,586 crore, respectively. In February and March, they saw net purchases of Rs 1,539 crore and Rs 35,098 crore, respectively. They started the year on a negative note in January, selling equities worth Rs 25,744 crore.
On Friday, foreign institutional investors (FIIs) were net buyers of Rs 7,665.2 crore while domestic institutional investors (DIIs) were net buyers of Rs 2,606.18 crore.
Expert VK Vijayakumar, chief investment strategist at Geojit Financial Services, said a key trend in recent FPI flows, which became evident in August, is that FPIs continued to sell through exchanges while continuing to invest through the “primary market and others” category.
He attributed the selling trend to differences in valuations, saying primary market issues are priced comparatively lower while valuations remain higher in the secondary market. “FPIs are buying when securities are available at fair valuations and selling when valuations rise in the secondary market,” he added. “Till August 17, FPIs have sold shares worth Rs 32,684 crore through exchanges while investing Rs 11,483 crore in primary and other categories. This trend is likely to continue as India is currently the most expensive market in the world and it makes sense for FPIs to sell here and move funds to cheaper markets. This will not change even if the market becomes more bullish on fears of a receding US recession,” Geojit analysts said. “The FPI outflows seen on August 24 were primarily driven by a combination of global and domestic factors. Globally, concerns over unwinding of yen carry trade, a potential global recession, slowing economic growth and ongoing geopolitical conflicts led to market volatility and risk aversion. Domestically, after being net buyers in June and July, some FPIs are optimistic that Indian equities will see gains following a strong rally in the last quarter. Meanwhile, Vipul Bhoir, director, listed investments, Waterfield Advisors, is of the view that variability in quarterly earnings and relatively high valuations have made Indian equities less attractive. However, he feels that FPI inflows into India should continue given India’s strong economic performance including GDP growth, reduction in fiscal deficit, manageable current account deficit and robust sectoral growth and industrial production.”
Also read: Q1 review: The brokerage cuts FY25 profit by 2% as Nifty PAT growth sub-5%
(Disclaimer: The recommendations, suggestions, views and opinions expressed by the experts are their own. They do not necessarily represent the views of the Economic Times)
