Indian markets continued to see selling pressure from foreign portfolio investors in October. However, domestic institutional investors remained buyers of Indian equities.
Overseas investors offloaded stocks worth Rs 30,827.2 crore in October, while also recording the biggest single-day equity selloff for the year on Oct. 24, according to provisional data from the National Stock Exchange.
The selling spree by FPIs comes even as they are increasingly investing in the debt market.
FPIs have infused Rs 6,382 crore into the debt market (excluding debt-VRR) in October, according to data from the National Securities Depository Ltd. Year-to-date, the inflows into the debt market stands at a six-year high of Rs 35,501 crore.
Domestic investors mopped up stocks worth Rs 28,254 crore in October, their second largest monthly inflows for the year, according to provisional data from the NSE.
The downtrend that the equity market has seen will continue for many more weeks, and the only positive factor visible is the domestic liquidity, Gautam Shah, founder and chief strategist of Goldilocks Premium Research Pvt., told BQ Prime's Niraj Shah.
“The Rs 16,000 crore coming into the system every month will protect the market from collapse, or a deeper fall.”
Foreign investors sold stocks worth Rs 14,768 crore in September, after buying equities worth Rs 1.69 lakh crore from March to August this year.
Even after experiencing foreign fund outflows in September, India is still the largest recipient of FPI flows among emerging markets so far this year. The FPIs were sellers in Thailand, Taiwan, the Philippines, Malaysia, Indonesia, and Vietnam, according to Bloomberg data.
The FPI selloff in the last two months was largely due to worries about rising U.S. yields and the Israel-Hamas war. Last week, Indian equity benchmarks fell for the sixth straight day, the longest losing stretch in more than seven months.
Foreign institutions have been net buyers of Rs 95,971 lakh crore worth of Indian equities so far in 2023, according to data from the National Securities Depository Ltd., updated till the previous trading day.
The S&P BSE Sensex closed 237.72 points, or 0.37%, lower at 63,874.93, while the NSE Nifty 50 declined 61.30 points, or 0.32%, to end at 19,079.60 on Tuesday.
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