Indian equity markets continue to feel pressure from continued selling by foreign portfolio investors (FPIs).
According to National Securities Depository Ltd (NSDL) data, FPIs sold shares worth a sizeable ₹19,994 crore in the first five trading sessions of November, adding to concerns over market stability.
The data also showed that the highest single-day sale was recorded last Friday, with foreign investors selling shares worth ₹5,635 crore.
This aggressive selling trend of FPIs has dragged down the major Indian indices, the Nifty 50 and Sensex, both of which have fallen by around 8 percent since the start of this selling wave in October.
In October, FPIs marked their highest-ever monthly selling activity, with a record ₹1,13,858 crore worth of shares sold through the exchanges.
The magnitude of these outflows underlines the cautious approach FPIs have taken towards Indian equities. However, despite this heavy selling in the secondary market, FPIs have remained active buyers in the primary market.
In October, FPIs invested ₹19,842 crore in initial public offerings (IPOs) and other primary market opportunities, showing their selective interest in certain sectors and new companies entering the market.
Experts suggest that short-term volatility could persist as foreign investors reshuffle their portfolios.
“The rally in Chinese shares appears to have weakened, as reflected in the downward trend of the Shanghai and Hang Seng indices in recent days. Given the high valuations in India, FPIs could continue to sell, limiting any potential upside.” “Another key trend in the sectoral moves is that despite massive FPI selling in the financial sector, this sector is resilient as valuations are reasonable and any selling is absorbed by DIIs and individual investors, especially HNIs,” said VK. Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
This continued selling of FPIs has brought a degree of uncertainty to the Indian equity markets, and experts are watching closely for signs of stabilization as domestic institutional investors try to offset the outflows.
