Foreign portfolio investors (FPIs) have sold Rs 19,994 crore worth of Indian equities in the first five trading sessions of November, exacerbating market volatility and raising concerns over stability.
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The Indian stock markets are continuing to face pressure from persistent selling by foreign portfolio investors (FPIs). According to data from the National Securities Depository Ltd (NSDL), FPIs have sold equities worth a substantial Rs 19,994 crore in just the first five trading sessions of November, heightening concerns about the stability of the market.
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The data also reveals that the highest single-day selling occurred last Friday, when foreign investors offloaded shares worth Rs 5,635 crore. This wave of selling has put significant strain on the major Indian indices, with both the Nifty 50 and Sensex dropping by around 8 per cent since the selling spree began in October.
In October, FPIs had recorded their highest ever monthly selling, with Rs 1,13,858 crore worth of shares being sold through the exchanges. The sheer volume of this outflow underscores the cautious stance that foreign investors have taken toward Indian equities. However, despite the heavy selling in the secondary market, FPIs have remained active in the primary market, with selective investments in certain sectors and new companies entering the market. In October alone, FPIs invested Rs 19,842 crore in initial public offerings (IPOs) and other primary market opportunities, highlighting their continued interest in specific areas.
Experts believe that the volatility could persist in the near term, as foreign investors adjust their portfolios. "The rally in Chinese stocks seems to have slowed, as seen in the recent declines in the Shanghai and Hang Seng indices. Given the high valuations in India, FPIs may continue to sell, which could cap any potential upward movement in the market. Another noteworthy trend is that despite significant FPI selling in financial stocks, the sector has shown resilience due to reasonable valuations, with the selling being absorbed by domestic institutional investors (DIIs) and high-net-worth individuals (HNIs)," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
This ongoing selling by FPIs has introduced an element of uncertainty into the Indian equity markets. Experts are now closely monitoring the situation, looking for signs of stabilisation, as domestic institutional investors strive to counterbalance the outflows. According to ANI, this shift in investor sentiment has raised questions about the market's near-term outlook and its capacity to recover from the recent declines.
(With inputs from ANI)
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