FPIs continue selling streak, pulling out ₹13,000cr from Indian equities
What's the story
Foreign portfolio investors (FPIs) have continued their selling spree in the Indian markets, pulling out a net ₹13,028 crore from equities during the week ending December 5. The data was provided by the National Securities Depository Limited (NSDL). The trend of relentless outflows was seen on four out of five trading days last week, with only Friday offering a brief respite.
Market trends
Thursday sees highest single-day outflow
The maximum outflow was on Thursday, December 3, when FPIs pulled out ₹4,752.40 crore from equities. This was the highest single-day outflow of the week. Wednesday saw net sales of ₹4,033.46 crore while Monday and Tuesday witnessed outflows of ₹3,489.27 crore and ₹846.04 crore, respectively. However, Friday brought a temporary turnaround as FPIs turned net buyers with inflows of ₹1,301.07 crore in equities for that day alone.
Investor behavior
Global risk-off sentiment and rupee depreciation impact FPIs
Himanshu Srivastava of Morningstar Investment Research India said, "FIIs remained net sellers in Indian equities, extending the cautious trend seen through much of the year." He attributed this to global risk-off sentiment and rupee depreciation. Dr. VK Vijayakumar of Geojit Investments Limited also noted that FIIs are selling now because of the sharp depreciation of the rupee by around 5% this year.
Debt market
FPIs show mixed behavior in debt segment
In the debt segment, FPIs showed mixed behavior across categories. The Debt-FAR (Fully Accessible Route) segment saw net outflows of ₹1,012.62 crore for the week with Thursday and Friday witnessing major withdrawals of ₹390.25 crore and ₹2,049.71 crore, respectively. However, the Debt-General Limit category attracted net inflows of ₹764.17 crore mainly due to Tuesday's massive investment through primary markets.
Market dynamics
Domestic investors offset FPI outflows
Dr. Vijayakumar noted that domestic investors have been systematically investing, aided by continuous fund flows and robust GDP growth numbers. He said, "The 25 bp rate cut by the RBI and the proposed huge liquidity infusion have further improved sentiments in favor of the bulls." This highlights how domestic investors are helping to balance out FPI outflows in Indian markets.