They carried on the trends in May from April in which FPIs sold shares worth Rs 8,671 crore even as the domestic institutional investors have displayed keenness on remaining in the buying side.
Commenting on the current selling trends by FIIs, analyst V K Vijayakumar said that what appeared like a trickle in April turned into a flood in May. “FII selling in the cash market was massive at Rs 33,460 crore. This heavy selling was triggered by the massive outperformance of Chinese stocks,” he reasoned.
On Friday, foreign institutional investors (FIIs) were net sellers of Indian equities at Rs 944.83 crore versus Rs 2,320.32 buying by the DIIs.
“The Hang Seng index, dominated by Chinese ‘H’ stocks (FIIs invest through the Hong Kong market since there are restrictions on investing through the Shanghai market) boomed by 7.66% during the last month. The valuation of Hang Seng had crashed to a PE multiple of around 9 prompting FII buying, triggering ‘ sell India, buy China trade,’ Vijayakumar said.Shares of Chinese mainland companies which are listed on the Hong Kong stock exchange or other foreign exchanges are called H stocks. Vijayakumar, who is the chief investment strategist at Geojit Financial Services, feels that the election-related jitters could also be the reason influencing FII selling. “News that the decline in voter turnout in the first three phases of voting restrained the bulls. The view that it won’t be an easy victory for the BJP/ NDA, which the market had largely discounted, gained ground,” the Geojit analyst said.
While he thinks that the situation is once again slowly changing in favour of the ruling dispensation, the base case scenario appears to be a clear verdict in favour of BJP/NDA.
In his view, FIIs will be back in action in India once clarity emerges on the election front since they cannot afford to miss the post-election results rally. Moreover, the rally could begin even before the election results, he opined.
In March and February, FPIs were net buyers at Rs 35,098 crore and Rs 1,539 crore after selling shares worth Rs 25,744 crore in January. On the net basis, they are sellers at Rs 19,824 crore, so far in this year.
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