The Foreign Portfolio Investors (FPIs) have shifted to net selling after consistent buying for two weeks in the equity market. The total withdrawal for this week sums up to Rs 976 crore by FPIs. The shift in sentiment was driven by the strengthening US dollar and the steady rise in US 10-year bond yields, which weighed on global investor confidence.
The week started on a positive note, investing Rs 3,126 crore in Indian equities during the first two trading sessions (December 16-20). However, the mood reversed in the latter half of the week, with FPIs offloading over Rs 4,102 crore worth of equities in the next three sessions, resulting in an overall net outflow of Rs 976 crore, according to data from the National Securities Depository Limited.
V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services said, “The sudden change in FII strategy from buying to selling has impacted markets. In the early days of December FIIs were consistent buyers; they bought equity for Rs 14435 crores in the cash market till 13th December. But they have turned into big sellers after that.”
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He added,”For the week ended 20th December FIIs have sold equity for Rs 15828 crores in the cash market, selling on all days. Rising dollar (dollar index above 108) and steady rise in the US 10-year bond yields to 4.5% contributed to the FII selling. India-specific issues like slowing growth concerns and flat corporate earnings in Q2 also contributed to the FII selling.”
Positive trend despite selling
Despite this short-term reversal, the broader trend for December remains positive. So far this month, FPIs have infused Rs 21,789 crore into Indian equities, highlighting their continued confidence in India’s economic growth potential and its resilient stock market.
Despite the short-term outflows, experts suggest that the sell-off has made valuations in certain large-cap sectors, such as banking, more attractive. Investors are encouraged to take advantage of the market downturn and consider quality large-cap stocks. Sectors like pharma, IT, and digital platform companies are expected to remain resilient and continue to perform well.
Himanshu Srivastava, Associate Director, Manager Research, Morningstar Investment Research India
said,”FPIs adopted a cautious approach due to the US Fed meeting and uncertainty about its outcome and future policy direction,
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