FPIs Pull Out Rs 27,142 Crore In 4 Days In Indian Stocks; Is Israel-Hezbollah War The Reason Or...?

Foreign portfolio investors (FPIs) have taken a U-turn in October month, after being buyers since May 2024. So far in four trading sessions of October 2024, FPIs have pulled out Rs 27,142 crore from Indian stocks. This is also during the time when Sensex and Nifty fell by nearly 5% in the trading week of September 30 to October 4.

From the October 1st to October 4th trading session, FPIs removed Rs 27,142 crore from Indian stocks, while they carried an outflow of Rs 900 crore in the debt market. However, they emerged as net buyers in debt-VVR and hybrid market to Rs 190 crore and Rs 6,997 crore respectively.

That being said, in the overall Indian stock market, the outflow is to the tune of Rs 23,101 crore.

From September 30 to October 4, the Sensex nosedived by 4,243.17 points or 4.94%, while the Nifty 50 dropped by 1,214.80 points or 4.63. Overall, by the end of October 4th, the Sensex was at 81,688.45 and Nifty 50 was at 25,014.60.

Could Israel-Hezbollah's latest war be the reason for FPIs to turn net sellers in Indian stocks? That is hardly the case!

As per Dr V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, geopolitical tensions in the Middle East have become a major worry for global equity markets. But the markets have, so far, shrugged off these tensions. The mother market US is resilient with 21% returns YTD.

He further said that even though crude has risen in recent days, there is no sharp spike so far. The situation will change if Israel attacks oil installations in Iran.

Highlighting ahead, Vijayakumar revealed that in a sudden U-turn in FII strategy, FIIs turned massive sellers in the Indian market in October. During the three trading days in October, FIIs sold equity for Rs 30718 crores in the cash market, according to provisional data.

"The selling has been mainly triggered by the outperformance of Chinese stocks. The Hang Seng index shot up by 26% in the last month and this bullishness is expected to continue since valuations of Chinese stocks are very low and the Chinese economy is expected to do well in response to the monetary and fiscal stimulus being implemented by the Chinese authorities," he said.

FPIs Turning Buy On China, And Sell On Indian Stocks?

Vijayakumar said, "If the momentum in Chinese stocks continues FIIs may continue to sell in India where valuations are elevated. It remains to be seen how long the optimism lasts. Massive FII selling in financials especially frontline banking stocks have made their valuations attractive. Long-term domestic investors may utilise this opportunity to buy high-quality banking stocks."

FPIs were net buyers in September 2024 with an inflow of Rs 57,724 crore in Indian stocks, followed by an inflow of Rs 7,320 crore in August, inflow of Rs 32,365 crore in July, and an inflow of Rs 26,565 crore in June.