The Foreign Portfolio Investors (FPI) have turned net sellers in the Indian equity market in 2024. They have sold Indian equities worth more than ₹25,000 crore, or over $3 billion, in CY24 so far. This outflow was driven by elevated US 10-year bond yields on the back of higher US inflation.
The sectoral trend in FPI flows reflects heightened confidence on the domestic investment cycle and premium consumption, analysts at ICICI Securities said.
This behaviour of FPIs contrasts with fading confidence in the tenacity of the global environment (IT and global commodities) and broad-based mass consumption categories (FMCG), ICICI Securities analysts Vinod Karki and Niraj Karnani said in a report.
While the FPI flows have turned negative so far for CY24, the sectoral flows till April 2024 paint a skewed picture for FPI flows rather than a typical risk-off environment led selling, they said.
Disproportionately high contribution to the selling is driven by financials (of over $5 billion) concentrated towards a few private sector banks. However, even within financials, PSU banks witnessed buying.
“Excluding the above aberration, the texture of FPI flows indicates elevated levels of buying in domestic cyclicals and capital-intensive stocks juxtaposed with selling in defensives and commodities,” the analysts added.
According to the data, select financials skew FPI outflows in the year 2024 so far, while the inflows into domestic cyclicals was robust.
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Sectorally, FPIs offloaded financials, FMCG, Energy and IT stocks the most, while they heavily bought Telecom and Industrials. FPIs have sold Financial stocks worth ₹45,900 crore so far in 2024.
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Meanwhile, domestic institutional investors (DII), including the mutual funds, have absorbed the selling in private banks, energy and FMCG stocks by FPIs.
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The data also shows that FPI holding of Indian equities remained at a decadal low. According to the data on National Securities Depository Ltd (NSDL), the overall asset under custody (AUC), or equity portfolio of FPIs, in the Indian equity market stood at ₹66.27 lakh crore as of April 30, 2024.
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Published: 17 May 2024, 12:03 PM IST
