Foreign portfolio investors (FPIs) remained net sellers in 2023 so far. In just three days of February, the withdrawal of foreign investors is so high 5,753 crore from equity. In January, the outflow came in approx. 28,852 crores. While selling pressure has been registered in the equity market, FPIs have moved towards debt instruments. The stock market was volatile in the week ended February 3 due to foreign fund outflow and free fall in Adani Group shares following Hindenburg’s allegations and withdrawal of the FPO.
According to NSDL data, FPI sold 5,753 crore from Indian shares February 1st to 3rd. On the other hand, they are net buyers in the debt market. 5,502 crore in these three days.
FPI pulled out in January 28,852 crore from equity, while he invested 3,531 crore in debt.
Year-to-date so far, FPIs are selling in equities market is approximately 34,605 cr. While in the debt market 9,033 crores.
Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said, “Huge selling by FPIs in Indian markets influenced the market sentiment.”
In the cash market, Geojit strategist highlights heavy selling by FPIs 53,887 crore in January and followed it up with 3,212 crores were sold so far in February.
Besides, foreign institutional investors (FIIs) were net sellers in Indian stocks last week, except on Budget Day (February 1).
FII sold 6,792.80 crore in the equity market on January 30, followed by another selloff 5,439.64 crore as on 31st January. However, FIIs were net buyers on the day of Budget 2023 announcement, which is where the inflows came from. 1,785.21 crores. But on February 2 and 3, the sentiment turned bearish once again. 3,065.35 crore and 932.44 crore respectively.
FII sold heavily between January 30 and February 3 trading session 14,445.02 crore in Indian equities.
Further, Vijayakumar said, “FPIs are selling in India and buying in cheaper markets such as China, Hong Kong and South Korea, where valuations are attractive.” This “short India and long other cheap markets” strategy impacted the Indian market’s performance by and large, so far this year. While China, Hong Kong and South Korea are up 4.71%, 7.52% and 11.45% respectively, YTD India is down 1.89%.”
He said, “Such underperformance is unlikely to continue for long. FIIs have also been very low in the derivatives market. The budget was better than expected. But the market could not hold this gain since Adani. The stock crisis has Sentiment swayed. Banking stocks weighed in on fears that Adani exposure will hit banks. But RBI’s message that the Indian banking system is healthy led to a late rally in banking stocks.
FII has sold 2,212.58 crore in equity so far in February. Last month, the outflow was massive 41,464.73 crores.
However, the stock market closed on a positive note from January 30 to February 3, despite steady foreign fund outflows.
Sensex remained in the green during the entire period last week and gained 1,511 points or 2.55%. On the other hand, the Nifty 50 traded on a mixed note though gained 250 points or 1.42% overall for the week.
On Friday, the Sensex closed at 60,841.88, up 909.64 points or 1.52%. The Nifty 50 closed at 17,854.05, up 243.65 points or 1.38%.
Disclaimer: The views and recommendations given above are of individual analysts or broking companies and not of Mint.
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