fpi watch: FPI’s net selling of Indian stocks so far in May is Rs 22,046 crore.
They continued the trend from April to May, when FPIs sold stocks worth Rs 8,671 crore, with domestic institutional investors keen to remain on the buy side.
Commenting on the current sales trend of FIIs, analyst VK Vijayakumar said that what looked like a trickle in April turned into a flood in May. “The sales of FIIs in the cash market were huge at Rs 33,460 crore. “This massive sell-off was triggered by the extraordinary performance of Chinese stocks,” he explained.
On Friday, foreign institutional investors (FIIs) were net sellers of Indian stocks worth Rs 944.83 crore, while DIIs bought Rs 2,320.32.
“The Hang Seng Index, dominated by Chinese ‘H’ stocks (FIIs invest through the Hong Kong market as there are restrictions on investing through the Shanghai market), is up 7.66% over the past month. Hang Seng’s valuation has crashed to a PE multiple of around 9x, spurring FII buying and triggering ‘selling in India, buying in Chinese deals’, Vijayakumar said. Shares of mainland Chinese companies listed on the Hong Kong Stock Exchange or other foreign exchanges are called H shares. Vijayakumar, chief investment strategist at Geojit Financial Services, believes election-related jitters could also be a reason affecting FII sell-off. “The news is that the decline in voter turnout in the first three stages of voting suppressed the upward trend. It has given strength to the prospect that it will not be an easy victory for the BJP/NDA, which the markets had heavily discounted,” said a Geojit analyst.
Although he believes the situation is slowly changing in favor of the ruling regime once again, the base case scenario appears to be a clear verdict in favor of the BJP/NDA.
In his view, FIIs will become active in India again once there is clarity on the election front as they cannot afford to miss the post-election results rally. Moreover, he said, rallies could begin even before the election results are known.
FPIs were net buyers of Rs 35,098 crore and Rs 1,539 crore in March and February, after selling stocks worth Rs 25,744 crore in January. On a net basis, it has been sold for Rs 19,824 crore so far this year.
(Disclaimer: Recommendations, suggestions, views and opinions provided by experts are their own and do not represent the views of The Economic Times.)
