Foreign portfolio investors (FPIs) remained overall net buyers in the current month, however, in the past few days, money has been pulled out of equities. Currently, the market sentiment turned volatile due to fears of a global economic slowdown. In the trading week of September 12-16, both the Sensex and Nifty 50 fell over 2%. This month, as on September 16, the investment of FPIs in the equity market is . More than 12,000 crores. Foreign investors are expected to be on wait-and-watch mode ahead of the US Fed’s policy meeting later this week.
NSDL data revealed that FPI Net buyers in September so far (as on the 16th) are inflows of 12,084 crore in the Indian equity market. They are also net buyers in loans and hybrids. Market with the influx of 1,777 crore and 268 crores respectively. However, FPIs are net sellers in debt-VRR instruments, whose outflows are 1,225 crores.
Thus, in the overall Indian market (including equity, debt-VRR, hybrid and debt), FPIs have pumped 12,904 crore so far in the current month.
Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said, “A key factor supporting the recent rally in the Indian market has been the continued FII buying that started in July and gained momentum in August. FII buying continued into September as well. As per NSDL data, FPIs buy through exchanges in September till 16th 12084 crores.”
However, Vijayakumar also said, “FPIs have become sellers in the cash market in the last few days. They have sold equity value. 3260 crores on Friday 16th (Provisional). This sudden big sell-off may have contributed to the sharp drop of 1093 points in the Sensex on 16th. The fear of a global economic slowdown has made the global market conditions volatile.”
According to NSE data, foreign investors (FIIs) pulled out on 16 September 3,260.05 crore—exceeds outflow from equity market 1,270.68 crore as on September 15, and 1,397.51 crore as on September 14.
In August, FPIs made the biggest investment of the year. stood at the inflow 51,204 crore in the equity market.
Notably, in the first six months of 2022, FPIs were net sellers, and the outflow trend ended in the month of July. FPI set record from January to June 2,17,358 crore from the equity market. in June. Highest sell-off witnessed in the year with outflow of 50,203 crores.
In Q2 of FY23 (July to September 16), some outflows have recovered in equities due to buying.
Year-on-year (till Sep 16), FPI outflows are now at 1,49,081 crore in the equity market. In the overall Indian market, the outflow is around 1,55,894 crores.
Going forward, Vijayakumar said, “FPIs are likely to wait and see before resuming their purchases in India.”
According to Apoorva Sheth, Head of Market Perspectives, Samco Securities, the FOMC meeting and press conference will be the focus of attention next week. Globally, the Fed’s interest rate decision could cause panic in the markets. Given the harsh stance of the US Fed, some are also expecting a rate hike of 100 bps. US markets have already faced deep cuts in response to headline CPI and core inflation data for August ’22. Though India has outperformed all other major markets, it is expected to remain volatile.
The FOMC meeting is scheduled to be held from September 20-21. Most are expecting a third aggressive rate hike of 75 basis points from the Fed to beat multi-decade high inflation.
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