The Foreign portfolio investors (FPIs) have significantly reduced their selling streak in Indian equities in June. The development comes after the stability returned to Indian markets with a fall in the ‘VIX’ volatility index.
Further, the FPIs reduced their buying momentum with the onset of the new fiscal 2024-25 (FY25).
FPIs offloaded Rs 3,064 crore worth of Indian equities and the net investment turned positive to Rs 4,752 crore as of June 14, taking into account debt, hybrid, debt-VRR, and equities, the data from the National Securities Depository Ltd (NSDL) said.
The total debt inflows stand at Rs 5,703 crore till the second week of June.
The first week of June witnessed massive volatility in FPI flows in response to exit polls and the actual election results. FPIs bought equity for Rs 6,521 crore on June 3 in response to exit polls.
Experts have believed that the FPI strategy is to sell India which is expensive and buy China which is very cheap mainly through Hong Kong.
The price to earnings or PE ratio in India is more than double the PE ratio in Hong Kong. However, some are bullish on their verdict and expect inflows to resume soon.
The long-term outlook for FPI flows into Indian debt is positive due to India’s inclusion in global bond indices. However, near-term flows are being impacted by global macroeconomic uncertainty and volatility.
In May, the foreign investors pulled out a massive Rs 25,586 crore from Indian equities amid uncertainty surrounding the outcome of Lok Sabha Election and outperformance of Chinese markets.
Notably, this was way higher than a net outflow of over Rs 8,700 crore in April on concerns over a tweak in India’s tax treaty with Mauritius and a sustained rise in US bond yields.