From the position of being net sellers till last week they came a long way at the end of this holiday-shortened week. In the first week of June they were net sellers of domestic equities at 14,794 crore but narrowed the sale figures to Rs 3,064 crore at the end of the second week.
However, their position as a net seller still remains intact for the full year, so far. They have off-loaded equities worth Rs 11,194 in 2024.
A break-up of the FPI data since January shows that FPIs were net sellers in January, April and May as they pared down shares worth Rs 25,744 crore, Rs 8671 crore and Rs 25,586 crore, respectively. In February and March they were net purchasers of domestic equities at Rs 1,539 crore and Rs 35,098 crore, respectively.
On Friday, the Indian headline indices ended in the red, breaking their six-session gaining streak dragged by sell-off by the foreign institutional investors (FIIs). They were net sellers at Rs 1,790.19. As for the domestic institutional investors (DIIs), they ended-up buying shares amounting to Rs 1,237.21 crore. Commenting on this year’s FPI trends, expert V K Vijayakumar, who is Chief Investment Strategist at Geojit Financial Services had said that FPIs are regarding Indian valuations to be very high and therefore capital has been shifting to cheaper markets. “The FPI pessimism regarding Chinese stocks appears to be over and there is a trend of investing in Chinese stocks listed in the Hong Kong Exchange since the valuations of Chinese stocks have turned very attractive,” he opined.”After the huge volatility witnessed in the market in response to the election results ( both exit polls and actual results) the market is slowly stabilising. An important point to consider is the high valuations of Indian stocks, particularly in the broader market. High valuations will attract further selling by FPIs, going forward,” he added. After a June 4 shocker on the back of unexpected election results which did not give a full majority to the Bharatiya Janata Party (BJP), the markets have rebounded smartly.
Indian benchmark index Nifty has surged 1,617 points or 7.4% since June 4, 2024, the day election results were announced. Nifty ended 6% lower at 21,884.50. On June 21, Friday, it closed at 23,501.10. In the meanwhile, it made a fresh lifetime high of 23,664, which was a 1,779 points or 8.1% rally.
Commenting on how trends have changed since the election results, Sunil Damania, Chief Investment Officer at MojoPMS said, “Foreign Portfolio Investors (FPIs) have altered their position in the equity market following the election results, injecting Rs 23,786 crore since June 10. There are three primary reasons for this positive inflow. First, the continuity of the government assures ongoing reforms. Second, the Chinese economy is decelerating, as evidenced by a 12% decline in copper prices over the past month and third that certain block deals in the market have been eagerly taken up by FPIs”.
However, these FPI inflows are concentrated in a select few stocks rather than being widespread across the market or sectors, he added as he sees FPI inflows remaining constrained due to the high valuations currently being commanded by the Indian equity market.
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