FPIs withdraw ₹14,266cr from Indian equities this week
What's the story
Foreign portfolio investors (FPIs) have continued their selling spree in Indian equities, pulling out ₹14,266 crore during the week ending January 16. The data was released by the National Securities Depository Limited (NSDL). The massive outflow comes despite domestic institutional investors investing ₹16,174 crore into the market. This influx helped keep benchmark indices nearly flat for the week.
Market response
Selling trend and market impact
The weekly outflow from FPIs was spread over four trading sessions, with Thursday being a holiday on account of BMC elections. On January 12, they sold equities worth ₹3,686.99 crore. This was followed by another sale of ₹3,108.35 crore on January 13, and a marginal dip in selling to ₹429.85 crore on January 14. However, the pace accelerated sharply on January 16 when FPIs pulled out ₹3,515.33 crore from Indian stocks in one go.
Currency fluctuation
Dollar outflow and rupee stability
In dollar terms, the weekly outflow stood at $1,182.70 million, with Friday alone accounting for $389.72 million. The rupee traded in a narrow range during this period with the conversion rate hovering between ₹90.14 and ₹90.27 per dollar across four trading sessions. N ArunaGiri, CEO of TrustLine Holdings expressed disappointment over FII trends saying "the early hopes of a reversal in FII outflows have clearly been dashed."
Market dynamics
Global factors influencing FPIs' cautious stance
Ross Maxwell, Global Strategy Operations Lead at VT Markets, attributed the cautious stance to the global macroeconomic factors. He said, "Elevated US interest rates, uncertainty over the timing of Federal Reserve rate cuts, sticky inflation in advanced economies and a strong US dollar have tightened global liquidity and reduced risk appetite for emerging markets."