FPIs continue to sell stocks, withdrawing Rs 8,000cr from equities in October

In the first week of October, Foreign Portfolio Investors (FPIs) sold off Indian shares worth Rs 8,000 crore due to the strengthening of the dollar and the steadily rising rates on US bonds.

After turning into net sellers in September and withdrawing Rs 14,767 crore, this happened. Prior to the outflow, FPIs continuously purchased Indian stocks from March through August during the previous six months, bringing in a total of Rs 1.74 lakh billion.

According to VK Vijayakumar, chief investment strategist at Geojit Financial Services, given the rising dollar and US bond rates, FPIs are unlikely to become buyers in the market anytime soon.

Data kept by depositories show that Foreign Portfolio Investors (FPIs) sold shares worth Rs 8,000 crore last month (up till October 6).

This year, India has continued to lead other developing countries in luring foreign direct investment (FDI), but September saw selling and October has started with the same pattern.

“In recent weeks, increasing US bond rates have had a significant influence on capital flows to markets. The US bond market had a collapse in the first few days of October, momentarily pushing the 30-year bond rate near 5%. According to Vijayakumar, the benchmark 10-year yield is continuously above 4.7%, which forces FPIs to sell in developing countries.

In addition to mounting worries about global economic development, Himanshu Srivastava, Associate Director – Manager Research, Morningstar India, linked the outflow to economic uncertainty in the US and Eurozone countries. Foreign investors were risk apprehensive as a result of this circumstance.

In addition, he added, rising oil prices, stubborn inflation figures, and the idea that the interest rate could stay high for a longer period of time than projected would have led foreign investors to take a wait-and-watch stance.

Additionally, he continued, overseas investors will be aware of India’s sub-normal monsoon and its effect on inflation as concerns for the home economy.

Domestic institutional investors (DII) bought in response to FPI selling.

On the other hand, during the time period under consideration, FPIs made investments totaling Rs 2,081 crore in the nation’s debt market.

With this, FPIs have invested a total of Rs. 1.12 lakh crore in the equities market and more than Rs. 31,200 crore in the debt market so far this year.

In terms of industries, FPIs have sold in the banking, power, IT, and oil and gas sectors while purchasing capital goods, automobiles, and auto parts.

Additionally, Geojit’s Vijayakumar said that predicted positive second quarter financial results may deter FPIs from selling in this sector.