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FPIs flow turn volatile in equity market, investment stands at 8,638 cr till 23 Sept

The week from September 19 to September 23, FPIs have made more selling than buying in the Indian equities. (AFP)Premium
The week from September 19 to September 23, FPIs have made more selling than buying in the Indian equities. (AFP)

  • According to NSDL data, FPIs pumped in 8,638 crore till September 23 in the current month in the equity market. This is far lower compared to the August print where inflows stood at a whopping 51,204 crore -- which is the highest buying so far in the current year.

Less than a week is left for September month to over, and foreign portfolio investment (FPIs) flows have turned highly volatile due to macroeconomic conditions. The week from September 19 to September 23, FPIs have made more selling than buying in the Indian equities. Overall, FPIs activity in the domestic market is balanced and they still are net buyers for the month, however, the inflow is steeply lower compared to August. As of now, in September, FPIs are net buyers with an inflow of 8,638 crore in the equity market.

According to NSDL data, FPIs pumped in 8,638 crore till September 23 in the current month in the equity market. This is far lower compared to the August print where inflows stood at a whopping 51,204 crore -- which is the highest buying so far in the current year. FPIs pumped in 4,989 crore in the equities in July.

During the week ending September 16, NSDL data showed that FPIs inflow in the equities stood at 12,084 crore.

Despite Sensex crossing 60,000 and Nifty 50 reaching above the 18,000 mark in mid-September, FPIs mood dampened due to current volatile sentiments in global markets. The last few sessions of markets have been chaotic as fears of recession, and economic slowdown worries spark panic selling, especially after US Fed's huge 75 basis points hike for the third policy in a row. Markets mood spooked further on expectations of 125 bps hikes in the next two policy meetings by Dec 2022. INR breached a fresh record low of 81 against the US dollar with FIIs turning net sellers last week. Sensex and Nifty 50 erased their mid-month gains and struggled to breathe a little over 58,000 and 17,300 levels.

Last week, on Friday, Sensex closed at 58,098.92 lower by 1,020.80 points or 1.73%. Nifty 50 plunged by 302.45 points or 1.72% to end at 17,327.35.

Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, "FPI activity has turned highly volatile with alternate bouts of buying and selling. In September, till 23rd, FPIs bought on 8 days and sold on 8 days in the cash market. Increased FPI selling has happened in recent days due to rising dollar and rising bond yields in US."

Vijaykumar also highlighted that the resumption of FPI buying since July has been supporting the rally in India. Now, this is under threat with FPIs turning sellers in 5 out of the last 7 days. FPIs are unlikely to buy consistently when the US 10-year bond yield is above 3.7% and the dollar index is above 111.

As per data from Stockedge that tracks daily FII/DII performance on NSE, FIIs removed about 2,899.68 crore on September 23 -- higher than the outflow of 2,509.55 crore on September 22. The outflow was at mere 461.04 crore on September 21. FIIs were net buyers in the equities on September 19 and September 20 with an inflow of 312.31 crore and 1,196.19 crore respectively.

That said, from September 19 to September 23 week, FIIs have pulled out around 4,361.77 crore from the equities.

Noteworthy, as per the NSDL data, FPIs were net sellers in the first six months of 2022 (January to June), with a cumulative outflow of a record 2,17,358 crore from the equity market during the period. June witnessed the biggest selling of 50,203 crore. However, as FPIs turned net buyers from July, some losses have been recovered.

Now, year-to-date, FPIs outflow in the equity market has been reduced to 1,52,527 crore.

However, with global economic slowdown concerns taking a toll on market sentiment, it will be keenly watched how FPIs move in the equity market going forward.

Going forward, the Geojit strategist said, "With the dollar index above 111 and the US 10-year bond yield above 3.7 % FPIs are unlikely to buy aggressively, going forward. The situation will change if the dollar index and US bond yields decline. In September, FPIs were strong buyers in financials, autos, and capital goods and sellers in IT. If FPIs again turn buyers financials will again emerge stronger since financials have strong fundamental support."

Further, Vijaykumar said, "The near-term market outlook is bearish. Investors may wait and watch before committing more money. There is a trend of selective bottom-up stock picking in the broader market. This trend is likely to continue even when the headline indexes turn negative."

 

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.

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