In Indian markets, foreign portfolio investors (FPIs) kept up their selling streak from January, but in February, their outflows drastically decreased. Market analysts claim that FPIs are still purchasing debt and primary markets, offsetting the net sell-off amount for the month of February thus far. Nonetheless, as of 2024, FPI capital outflows are ₹26,168 crore.
According to data from National Securities Depository Ltd (NSDL), FPIs have sold ₹424 crore worth of Indian shares, bringing the overall inflow to ₹18,633 crore as of February 23 when debt, hybrid, debt-VRR, and equities are taken into account.
“An interesting feature of the FPI trend recently is the decline in FPI equity outflows despite the rising bond yields in the US. Normally when the US 10-year yield rises above 4.15 per cent, the FPIs sell heavily. But this is not happening now,” stated Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
FIIs and DIIs: Net seller for financial services
‘’FII became net seller for financial services shares in first two weeks of Feb selling ₹,7536 crore after offloading ₹30,000 crore in Jan month. Investors are cautious on the banking sector due to credit demand moderating and struggle to raise deposits.” added Arvinder Singh Nanda, Senior Vice President at Master Capital Services Ltd.
‘’Another two sectors which came on the seller list for FII are construction and telecom. The sectors which stay bullish for the FIIs are Healthcare, IT, consumer services and auto. It is expected that FIIs flow in India may increase amid strong earnings and investors globally are cautious about Chinese equities,” continued Nanda.
FPI outflows
‘’Since the DIIs, HNIs and retail investors are the dominant players now and their sustained buying is pushing the market to newer records, FPIs have taken a backseat. In February through 23rd FPIs had net sold equity only for ₹423 crores, sharply down from the January level,” stated Dr. V K Vijayakumar.
Even with excellent US bond yields, the market’s resiliency is keeping the FPIs from selling aggressively. FPIs are still buyers of debt; they have acquired debt totaling ₹18,589 crores as of February 1.
Due to the downturn in the economies of developing nations brought on by high interest rates, core inflation, and above-average valuation, international investors are currently avoiding risk. According to industry experts, India is currently experiencing a rippling effect, and this mood is anticipated to last through H1CY24.
Indian markets
After reversing a three-month selling trend in November 2023, FPIs became big sellers in January 2024, ending their purchasing streak. Investments had a strong spike in December 2023.
However, as the US Federal Reserve signaled the end of its tightening cycle and heightened expectations of a rate drop in March 2024, inflows increased in December on strong global indications. Due to this, US bond yields fell precipitously, and international capital began pouring into developing nations like India.
According to NSDL data, foreign portfolio investors (FPIs) bought shares of ₹9,001 crore in Indian stocks in November 2023, while they sold shares worth over ₹39,000 crore in September and October combined. FPI inflows were ₹24,546 crore when debt, hybrid, debt-VRR, and equity were taken into consideration.
