Foreign Institutional Investors Unload ₹22,858 Cr in Six Sessions: Key Factors Driving Bulk Selling in India’s Financial Market

  • Foreign institutional investors (FIIs) have sold off ₹22,858 crore in Indian markets within the first six market sessions of May 2024.
  • Domestic institutional investors (DIIs) have been net buyers, investing ₹16,700.19 crore, but this has not been enough to counterbalance the FII outflows.
  • The selling spree coincides with the final phases of the high-stakes Lok Sabha elections, with results due on June 4, 2024.

Foreign institutional investors are selling off in Indian markets, with outflows exceeding ₹22,000 crore in May 2024. This comes amid the final phases of the high-stakes Lok Sabha elections, creating uncertainty in the market.

FIIs and DIIs: A Contrast in Market Activity

While FIIs have been offloading their holdings, DIIs have been net buyers, investing ₹16,700.19 crore. However, the domestic inflows have not been aggressive enough to counterbalance the outflows by foreign investors. This is due to the uncertainty surrounding the election outcome.

Impact of Elections on Market Activity

The Lok Sabha elections have created a sense of uncertainty in the market, affecting the decisions of both FIIs and DIIs. The counting of votes and results on June 4, 2024, are eagerly awaited by investors and could potentially influence future market activity.

FIIs’ Selling Spree: Key Reasons

Several factors have contributed to the FIIs’ decision to sell off their holdings in Indian markets. These include high US bond yields, a rise in the India VIX index, the outperformance of Chinese markets, a hawkish stance by the US Federal Reserve, and the ongoing Lok Sabha elections.

Conclusion

The current market activity reflects the uncertainty surrounding the Lok Sabha elections and other global factors. Investors, both foreign and domestic, are closely watching these developments to make informed decisions. The market is likely to stabilize once the election results are out and other global factors settle down.

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