14 Mar , 2022 By : Kanchan Joshi
Foreign portfolio investors (FPIs) selling bias continued in March as well in Indian markets. FPIs outflow is highest in just 11 days of March than compared to the previous two months of this year. However, FPIs have been on a selling spree for the past sixth months in a row. Majority of the selling is carried in the equities market for the third month straight this year, while overseas investors are net sellers in the debt market for a second consecutive month.
Data given by NSDL, from March 01 to 11, FPIs offloaded a whopping Rs45,608 crore in Indian markets - highest compared to February and January of this year where selling was to the tune of Rs38,068 crore and Rs28,526 crore respectively.
In the equity market, FPI outflows are at Rs41,168 crore up to March 11. Overseas investors' appetite for equities has been bleak since the start of this year and the Russia-Ukraine conflict that has rocked the markets since late February further led to frenzy selling. FPIs outflow stood at Rs35,592 crore and Rs33,303 crore in February and January 2022.
Meanwhile, FPIs emerged net sellers in the debt market since February where outflow stood at Rs3,073 crore. However, the selling spree continued even in March with a higher outflow of Rs4,205 crore. FPIs were net buyers in debt during January where inflows stood at Rs5,194 crore.
Furthermore, in Debt-VRR market, FPIs sentiment has been volatile so far this year. Up to 11th March, the investors were sellers with an outflow of Rs226 crore compared to an inflow of Rs487 crore in the previous month. In January, an outflow of Rs2,114 crore was recorded in this market.
In the hybrid market, FPIs only turned sellers in March to Rs9 crore so far this month against net buying of Rs110 crore in February and Rs1,697 crore in January.
Why FPIs flow in Indian markets turn bearish?
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, "The bulk of FPI flows to India are coming from emerging market funds."
Vijayakumar explained that FPI selling is mainly confined to financials and IT since these segments constitute the bulk of Assets under the Custody of FPIs.
However, Vijayakumar also points out that an important takeaway from FPI selling is that it is not impacting all segments. For instance, FPIs sold IT stocks worth Ts 10984 cr in February, but in March IT is one of the best performing sectors.
"FPIs fear that India would be impacted more by the commodity price hike, particularly crude spike since India is a major crude importer," Vijayakumar added.
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