FPIs Invest Rs 10,690 Crore In Indian Stocks In August So Far, But There's A Catch!

Foreign portfolio investors (FPIs) were broadly net buyers of Indian stocks in August month thanks to inflows in the primary market and large bulk deals in specific stocks. But in the cash market, FPIs have sold 15,817 crore from in equities. Strong dollar and 10-year bold yield at 4.25% are seen as negatives for FPIs inflow, and hence they are expected to be sellers in the cash market in the near term. Capital goods stocks are among their top picks, while recently FPIs have started to sell financial stocks.

As per NSDL data, FPIs have invested Rs 10,690 crore in Indian equities from August 1st to 25th. Their appetite for the debt market stood with an inflow of Rs 5,950 crore, while they invested Rs 1,337 crore in hybrid instruments. However, FPIs are sellers of debt-VRR with an outflow of RS 3,210 crore so far in the current month.

Four more trading days are left in August month.

In the previous month, FPIs bought Rs 46,618 crore worth of equities, making it the second-highest monthly buying of 2023 after June 2023 where it invested Rs 47,148 crore in shares.

Also, so far in August 2023, foreign institutional investors (FIIs) sold pulled out Rs 15,821.13 crore from Indian stocks, while the domestic institutional investors (DIIs) are net buyers with an inflow of Rs 17,741.85 crore, as per Stock Edge data.

According to Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, FPI selling which began in early August continues. The consolidated NSDL data shows the August FPI investment through 26th at Rs 10689 crore. But this figure includes investment through the primary market and bulk deals, which have been gathering momentum recently. In the cash market, FPIs sold stocks for Rs 15817 crores through 26th August.

He added, "Strength in the dollar index at well around 104 and the US 10-year bond yield remaining around 4.25 % are short-term negatives for FPI flows to emerging markets like India."

An important feature of FPI investment is their consistent buying of capital goods. He added, and, of late, they have started selling in financials.

Given the strong dollar and rising US bond yields, Vijayakumar said, "FPIs are likely to continue selling in the cash market in the near term. The poor monsoon in August and its skewed spatial distribution may keep inflation elevated, and this is becoming an area of concern impacting sentiments in the market. This might impact FPI investment, too."

In the trading week from August 21 to 25th, Sensex shed 156.51 points or 0.24%, while Nifty 50 ended lower by 97.45 points or 0.50%.

Year-to-date, FPIs are net buyers of Indian equities with a strong inflow of Rs 1,33,715 crore. Meanwhile, FIIs are broadly net buyers with a meagre inflow of Rs 9,972.68 crore. On the contrary, DIIs have invested Rs 1,01,612.54 crore year-to-date.

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