FPIs Offload ₹21,201 Cr in August’s First Half; Domestic Investors Step In – Geojit Weighs In

Foreign portfolio investors (FPIs) sold Indian stocks worth Rs 21,201 crore during the first half of August, making them net sellers. Despite this, their total investments in Indian equities for the year still amount to Rs 14,365 crore.

Mixed Buying and Selling Trends

In contrast, FPIs were net buyers in July, purchasing shares worth Rs 32,365 crore, and in June, they bought stocks valued at Rs 26,565 crore. However, earlier in the year, they had been net sellers in April and May, selling shares worth Rs 8,671 crore and Rs 25,586 crore, respectively. The year started with FPIs selling Rs 25,744 crore worth of shares in January, but they turned net buyers in February and March, investing Rs 1,539 crore and Rs 35,098 crore, respectively.

On Friday, foreign institutional investors (FIIs) bought Rs 766.52 crore worth of Indian equities, while domestic institutional investors (DIIs) purchased Rs 2,606.18 crore.

The Trend of Selective Selling

A notable trend in August has been the consistent selling by FPIs in the secondary market, while they continue to invest in the primary market and other categories. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, explained that FPIs are selling in the secondary market due to high valuations but are still buying in the primary market where valuations are more reasonable.

Vijayakumar noted that FPIs have sold Rs 32,684 crore worth of equities through the exchange in August, while investing Rs 11,483 crore in the primary market and other areas. He expects this trend to persist as India remains one of the most expensive markets globally, leading FPIs to sell here and move their money to cheaper markets.

Global and Domestic Factors

The FPI outflows on August 24 were influenced by a mix of global and domestic factors. Globally, concerns over the unwinding of the Yen carry trade, potential recession, slowing economic growth, and ongoing geopolitical conflicts created market volatility. Domestically, after being net buyers in June and July, some FPIs likely decided to book profits following a strong rally in previous quarters.

Vipul Bhowar, Director of Listed Investments at Waterfield Advisors, pointed out that mixed quarterly earnings and relatively high valuations have made Indian stocks less appealing. However, he believes that FPI flows into India will continue due to the country’s strong economic performance, including GDP growth, a reduced fiscal deficit, a manageable current account deficit, and robust sector and industrial growth.