In July, FPIs bought domestic stocks worth Rs 32,365 crore, while in June they were net buyers of Rs 26,565 crore, after remaining net sellers in April and May when they sold shares worth Rs 8,671 crore and Rs 25,586 crore, respectively. In February and March, they were net buyers of Rs 1,539 crore and Rs 35,098 crore, respectively, after starting the year on a negative note in January when they offloaded shares worth Rs 25,744 crore.
On Friday, foreign institutional investors (FII) were net buyers of Rs 766.52 crore, while national institutional investors (DII) were net buyers worth Rs 2,606.18 crore.
A significant trend in recent FPI flows, which has become more pronounced in August, is the sustained selling by FPIs through the stock market while they continue to invest through the “primary market and others” category, said expert VK Vijayakumar, chief investment strategist at Geojit Financial Services saying.
He attributes the selling trend to differences in valuations as he said primary market issues have comparatively lower valuations while in the secondary market valuations continue to be high. “Thus, foreign investors buy when securities are available at fair valuations and sell when valuations get stretched in the secondary market,” he added. “Between August and 17, foreign investors have sold shares worth Rs 32,684 crore through the stock exchange while they invested Rs 11,483 crore through the primary market and other categories. This trend is likely to continue as India is the most expensive market in the world now and it is rational for foreign investors to sell here and move money to cheaper markets. This picture does not change even if the market turns more optimistic on fears of the US recession receding,” the Geojit analyst said. “The foreign investor outflows seen on August 24 were primarily driven by a combination of global and domestic factors. Globally, concerns over the sell-off of the yen carry trade, possible global recession, slowing economic growth and ongoing geopolitical conflicts led to market volatility and risk aversion. Domestically, after being net buyers in June and July, some foreign investors might have opted to book profits post the US recession,” said the Geojit analyst. In the previous quarters, the sharp rally has been recorded. Meanwhile, Vipul Bhowar, Head of Listed Investments at Waterfield Advisors, feels that mixed quarterly results and relatively higher valuations have made Indian stocks less attractive. However, he believes that FDI inflows into India should persist, given the country’s strong economic performance, including GDP growth, narrowing fiscal deficit, a manageable current account deficit and robust industrial sector and production growth.
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(Disclaimer:The recommendations, suggestions, views and opinions of the experts are their own and do not represent the views of the Economic Times)
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