- Foreign portfolio investors (FPIs) have turned aggressive buyers this month in Indian markets after the latest crash in equities over election volatility and hawkish stance from global central banks.
- Last month, FPIs tuned net sellers in Indian markets ever since reducing their buying momentum with the onset of the new fiscal 2024-25 (FY25).
- FPIs invested ₹17,083 crore worth of Indian equities and the total outflow stands at ₹16,797 crore as of May 10, taking into account debt, hybrid, debt-VRR, and equities, according to National Securities Depository Ltd (NSDL) data.
Foreign portfolio investors (FPIs) show a shift in investment trends in Indian markets amidst election volatility and global central banks’ hawkish stance.
Fund flow by FIIs and DIIs
Foreign institutional investors (FIIs) are on a selling spree in Indian markets with the total outflows nearing ₹25,000 crore in May 2024. FIIs have offloaded ₹24,975.5 crore within the first seven market sessions so far in May 2024. Domestic institutional investors (DIIs) were net buyers for all sessions, with a total investment of ₹19,410 crore, according to stock exchange data.
FIIs, FPIs dump Indian shares: Key reasons behind the bulk selling
From the data showing sharper declines in the broader market, it appears that HNIs and retail investors have booked some profits and are in a wait and watch mode, perhaps responding to the noise relating to uncertainty regarding the election results, according to analysts. Apart from the uncertainty surrounding election outcome and the impact of high US bond yields, there is another major reason behind the bulk selling by FIIs. That remains to be the current outperformance logged by the Chinese and Hong Kong markets, according to market experts.
FPI activity in Indian markets
In the first week of May, FPIs snapped their April’s selling streak and turned net buyers in Indian equities, however, sell-off continued in debt market. FPIs offloaded ₹8,671 crore in Indian equities last month and ₹10,949 crore in debt markets over high US bond yields. However, they pumped ₹35,098 crore in Indian equities during March 2024 – the highest inflows recorded in the first three months of 2024.
Conclusion
The shift in investment trends by FPIs and FIIs in Indian markets is influenced by several factors, including election volatility, high US bond yields, and the performance of Chinese and Hong Kong markets. While FPIs have turned net buyers, FIIs continue to sell off, indicating a complex investment landscape.
