BackFPIs outflow over ₹15,200 cr in Indian equities so far in Jan; sells big in financials, IT stocks
FPIs have emerged as big sellers in stocks of financials, IT, and telecom baskets. While metals and mining are among the favorites. FPIs' selloff is likely due to their positioning in cheaper markets in Asia and hence pullback in expensive Indian equities.
PremiumForeign portfolio investors (FPIs) remained as net sellers so far in the current month. The week from January 16 to 20th also witnessed significant foreign investors' funds outflow. FPIs have emerged as big sellers in stocks of financials, IT, and telecom baskets. While metals and mining are among the favourites. FPIs' selloff is likely due to their positioning in cheaper markets in Asia and hence pullback in expensive Indian equities.
As per the latest NSDL data, FPIs outflow between January 1st to 21st stood at ₹15,236 crore from Indian equities. FPIs have been net sellers also in debt-VRR and hybrid instruments to the tune of ₹873 crore and ₹114 crore respectively so far. On the contrary, FPIs are net buyers in the debt market with an inflow of ₹1,286 crore so far in the current month.
That said, the overall outflow from FPIs in the Indian market (including equities, debt, debt-VRR, and hybrid) is around ₹14,937 crore.
Meanwhile, foreign institutional investors (FIIs) also continued to carry more selling than buying in Indian stocks. In the week from January 16 to 20th, FIIs sold ₹2,461.03 crore in equities. The biggest selling in the week was on Friday at around ₹2,002.25 crore.
Overall, so far in January, FIIs outflow is around ₹19,880.11 crore in the Indian stocks.
Dr.V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, "The major trend in FPI investment in January is the sustained selling by FIIs, which is a bit surprising early in the year. In January till 21st FPIs have sold equity for ₹15425 crores (NSDL data). FPIs were big sellers in financials, IT, and telecom. They bought significantly only in metals and mining."
According to the Geojit strategist, the sustained selling by FPIs is a bit surprising since the dollar index has been steadily declining. The dollar index has declined from the 2022 peak of 114 to around 103 now. Declining dollars is favourable for emerging markets and, therefore, India should have received inflows.
But what is happening now is that FPIs are investing heavily in cheaper markets like China, Hong Kong, South Korea, and Thailand and they are selling in relatively expensive India, he added.
FPIs ended the year 2022 with an outflow of ₹1,21,439 crore in the equities due to macroeconomic uncertainties, rising interest rates trend, and geopolitical tension.
For the week ahead, Ajit Mishra, VP - of Technical Research, Religare Broking said, the coming week is a holiday-shortened one and we expect volatility to remain high, thanks to the scheduled monthly expiry of January month derivatives contracts. Besides, earnings and global cues will keep the participants on the edge. On the earnings front, participants will first react to the index majors like Reliance, ICICI Bank, and Kotak Bank in early trade on Monday. Apart from the banking majors like Axis Bank, top names from the auto pack will be in focus as Maruti, Tata Motors, Bajaj Auto and TVS Motors will announce their numbers during the week. Besides, prominent players from other sectors like Cipla, Dr. Reddy’s, Bajaj Finance, DLF, and Vedanta will also unveil their results.
Meanwhile, Mishra added, "we recommend continuing with a stock-specific trading approach and focusing on overnight risk management. Participants should prefer index majors and quality midcaps over others citing the prevailing underperformance of the broader indices."
Also, Vinod Nair, Head of Research at Geojit Financial Services said, subdued Q3 results, soft budget expectations, a slowing economy, FII selling, and concerns over global interest rate hikes defined the market in the past week. While economic optimism stemming from China’s reopening aided gains, weak US consumer data and hawkish comments from the Fed’s policymakers wounded investor risk appetite. Although we started the third quarter on a shaky note, the latest set of financial announcements from IT and banking blue chips are encouraging. Given the mixed undercurrents, the second line of Q3 and global market cues will determine the trend going forward.
On Nifty 50, Rohan Patil, Technical Analyst, SAMCO Securities said, "Nifty on the weekly chart is placed between a broader high-low range of 18,200 -17,800 levels from the past 4 weeks. Furthermore, the price is also trapped between the 9 & 21 EMA bands which suggest a break on either side will decide further directional move in the index."
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