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Business News/ Markets / Stock Markets/  FPI outflows driven by skewed selling in banks, domestic cyclicals see robust inflows
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FPI outflows driven by skewed selling in banks, domestic cyclicals see robust inflows

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.

FPIs have sold Indian equities worth more than ₹25,000 crore, or over $3 billion, in CY24 so far. (Image: Pixabay)Premium
FPIs have sold Indian equities worth more than 25,000 crore, or over $3 billion, in CY24 so far. (Image: Pixabay)

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.

Also Read: IT stocks see highest FPI selling worth 9,573 crore in April; Financials follow with 9,338 crore outflow

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.

Also Read: FPIs turn aggressive sellers on market crash; offload 17,083 crore in Indian equities: When will buying resume?

“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.

Source: ICICI Securities
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Source: ICICI Securities

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.

Source: ICICI Securities
View Full Image
Source: ICICI Securities

Meanwhile, domestic institutional investors (DII), including the mutual funds, have absorbed the selling in private banks, energy and FMCG stocks by FPIs.

Source: ICICI Securities
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Source: ICICI Securities

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.

Source: ICICI Securities
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Source: ICICI Securities

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Published: 17 May 2024, 12:03 PM IST
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