FPIs turn net sellers after six months of buying; withdraw over Rs 10,000 cr from equities

In the initial three weeks of September, Indian equities saw a withdrawal of more than Rs 10,000 crore by Foreign Portfolio Investors (FPIs), primarily influenced by increasing US interest rates, concerns about a potential recession, and the perception of overvaluation in domestic stocks.

Back-to-back six months of buying have come to a halt as FPIs have become net sellers, based on information from depositories, during the first 15 trading days of September, FPIs engaged in selling activities on 11 of those days, resulting in a net withdrawal of Rs 10,164 crore. This figure encompasses both bulk deals and investments made in the primary market.

Out of the total withdrawal of Rs 10,164 crore recorded up to September 22, more than Rs 4,700 crore was pulled out during the last week of the month.

This recent outflow follows a period in August when FPI investments in equities reached a four-month low at Rs 12,262 crore.

Here is the month-wise FPIs flow:

* All figures are in Rs in crore

Based on the above data, FPIs have withdrawn more than Rs 10,000 crore, not only from the equity markets but also in total FPI outflows, which exceeded Rs 10,000 crore. At the beginning of this calendar year, FPI outflows were recorded at Rs 26,543.75 crore in the month of January 2023. This outflow trend continued the next month as well, with February 2023 seeing a flow of Rs 4,139 crore.

In the month of September, FPIs once again became net sellers and registered an outflow of a significant amount, totalling Rs 10,099 crore, with equity sales amounting to Rs 10,164 crore during the same month.

However, the month has not yet been completed, and a substantial figure may emerge at the end of the month. We need to await the final figures patiently.

If we correlate this with Nifty’s monthly performance, we observe that whenever FPIs become net sellers in a month, the Nifty underperforms and closes the month negatively. The exception to this trend is the month of August when FPIs were net buyers, yet the Nifty ended the month negatively, down 2.53% from the previous month’s closing.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.