By V K Sharma
Foreign institutional investors (FIIs) continue to sell Indian stocks in their penchant for Chinese stocks, hoping the Communist Party of China (CPC) will take more concrete steps to address the long pending structural issues in China.
Till Friday, October 18, the FIIs have sold stocks valued at around Rs 80,220 cr in the Indian markets. This number is way above the all-time high selling mark by FIIs of Rs 65,816 crore, which they pressed in March 2020 at the onset of the pandemic. And we still have nine more trading days to go in October.
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The Nifty had plunged 23.24% in March 2020 on a closing basis and 32.95% on an intraday low basis. In contrast, the Nifty has fallen just 3.7% in October on a closing basis and 4.81% on an intraday low basis.
The markets haven’t fallen as much in October 2024 as compared to March 2020 because of two reasons. The main reason is that the FII sales as a percentage of our market cap are much lower today than what it was in March 2020. The second reason is that DFIs today are more active than what they were in March 20020. The DFIs in October 2024 have absorbed 92.46% of FII sales as compared to 84.47% in March 2020.
Meanwhile, the Chinese economy continues to disappoint, rising at a rate of just 4.6% in the September quarter and a far cry from the target of 5%. The FIIs have a long wait ahead for their Chinese dreams to fructify. In the longer term, FIIs will have to match the increasing weight of the Indian markets, if they don’t, it will be at their own peril.
Coming to the last week, the Nifty edged lower by 0.44% and closed at 24,854 after forming a low of 24,567 on Friday itself. The short-term trend continued to be weak,
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