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FPIs turn net sellers this week in equity market, so far inflow is at ₹4,500 cr in Dec


In the market week that ended on December 9, foreign portfolio investors (FPIs) made more selling in the equity market tracking broad-based selloffs globally. Although RBI’s softer rate hike by 35 bps in repo rate could have lifted the market’s cautious mood, however, it would be the central bank’s stance that remained unchanged indicating the fight for tackling inflation is not over yet and that led investors to the edge. Also, investors are in a wait-and-watch mode for US Federal Reserve’s next policy meeting and inflation data. By end of December 9th, FPIs inflow stood at 4,500 crore in the Indian equities.

As per NSDL data, as of December 9, in the current month, FPIs inflow is around 4,500 crore in the equities. It needs to be noted that, NDSL data last week showed that between December 1-2, FPIs inflow was around 7,437 crore in the equities. This meant that FPIs inflow was trimmed by 2,937 crore in the week from December 5-9. Hence, FPIs were net sellers in the current week.

While FPIs sold in the equities, they emerged as net buyers in the debt market as the inflows here extended to 2,467 crore by end of December 9th week, compared to an inflow of 394 crore in the first two days of December. Furthermore, FPIs bought worth 24 crore in the hybrid market, however, they were net sellers in debt-VRR with an outflow of 114 crore.

Taking into consideration the above, so far in December, FPIs inflow in the Indian market (including equities, debt, debt-VRR, and hybrid) stood at 6,876 crore.

On the other hand, FIIs have been net sellers so far in December with an outflow of 5,657.14 crore in the equities. Except for December 2nd, FIIs have made selling in the equities in the first 10 days of the current month.

In November month, FPIs inflow overall in the equities market came in at 36,239 crore — becoming the second-highest monthly buying so far in 2022. FPIs most buying was seen in August with an inflow to the tune of 51,204 crore.

Dr.V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, “In November FPIs invested 36,238 crores in Indian equities (Source: NSDL). They were big buyers in financial services. Buying was witnessed in segments like capital goods, autos, and auto components. FPIs were sellers in consumer durables, textiles, power, and telecom. Even though FPIs continued to buy in early December too, they turned sellers in recent days.”

On Friday, global recession fears led to a sharp selloff in IT stocks which further extended their losses, taking a heavy toll on Indian markets. Sensex shed 389.01 points or 0.62% to end at 62,181.67, while Nifty 50 tumbled by 112.75 points or 0.61% to close at 18,496.60.

In the current week, overall, Sensex contracted by 1.09%, while Nifty 50 plummeted by 1.07% — making it their biggest one-week fall since the week that ended September 30.

Further, Vijaykumar added that the decline in the dollar index to below 105 was the major factor that triggered inflows.

However, FPIs will be ending the year 2022 as net sellers. Year-to-date, the outflow in the equities is around 1,28,058 crore.

According to Geojit expert, there is a trend of money moving into cheaper markets like China and South Korea where the valuations are compelling now. Even though India will continue to attract foreign capital, the high valuations in India will be a deterrent.

Going forward, he said, “in the near term, FPIs are likely to make only modest purchases in performing sectors and may continue to sell and book profits in sectors where they are sitting on big profits. More money is likely to move into cheaper markets.”

 

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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Read More: FPIs turn net sellers this week in equity market, so far inflow is at ₹4,500 cr in Dec

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