MUMBAI: Foreign Portfolio Investors (FPIs) turned net sellers in the Indian stock market, offloading equities worth Rs 12,404.73 crore during the week of August 5 to 9.
According to data from the National Securities Depository Limited (NSDL), FPIs sold equities every day of the week except Friday when they bought stocks worth Rs 521 crore.
Market experts indicated that foreign investors withdrew money from the Indian markets due to uncertainties stemming from concerns about the unwinding of carry trades, driven by the Yen’s rapid appreciation and weak macroeconomic data, which fueled recession fears in the U.S.
“Though FPIs have been net sellers in the Indian markets for the last month, strong inflows from Domestic Institutional Investors (DIIs) and retail participants have absorbed the selling pressure from FPIs. While the carry trade issue appears to have eased for now, a gradual increase in interest rates by the Bank of Japan could have some impact in the near future,” said Vinod Nair, Head of Research, Geojit Financial Services.
Asian markets faced selling pressure after the Bank of Japan announced a well-telegraphed rate hike, leading to an unwinding of Yen carry trades as the Yen appreciated. However, markets later recovered after the Bank of Japan intervened to control market turmoil, deciding not to hike interest rates.
Interestingly, at a time when overseas investors were net sellers in Indian equities, domestic institutional investors remained net buyers, largely compensating for the outflows by foreign investors. According to NSE data, the net gross purchase by domestic investors (DIIs) in August stands at Rs 23,500.01 crore.
In July, net foreign investments in the Indian stock market amounted to Rs 32,365 crore, according to data provided by the National Securities Depository Limited.
In June, FPIs bought stocks in India worth Rs 26,565 crore on a cumulative basis. Foreign Portfolio Investment (FPI) involves an investor buying foreign financial assets.