Foreign Portfolio Investors (FPIs) have sold equity worth Rs 32,684 crore (till August 17) through the stock exchange while investing Rs 11,483 crore through the primary market and others category, industry data said on Saturday.
According to market watchers, this trend is likely to continue since India is the most expensive market in the world now and it is rational for FPIs to sell here and move the money to cheaper markets.
The picture doesn’t change even if the market turns more bullish on fears regarding US recession receding, they added.
Global market volatility and risk aversion were caused, according to Vipul Bhowar, Director Listed Investments, Waterfield Advisors, by worries about the termination of the Yen carry trade, a possible global recession, decreasing economic growth, and ongoing geopolitical crises.
Typically, following a robust advance in prior quarters, some FPIs may have decided to book profits after being net purchasers in June and July. Furthermore, Indian shares are now less appealing due to inconsistent quarterly results and comparatively higher valuations, according to Bhowar.
Notwithstanding these obstacles, experts noted that FPI flows into India should continue given the country’s robust economic performance, which includes GDP growth, a smaller budget deficit, a manageable current account deficit, robust sector growth, and industrial production.
While secondary market valuations are still high, primary market issues are valued at relatively lower levels.
For this reason, FPIs purchase securities at fair valuations when they become available and sell them when secondary market valuations start to sag.
FPIs have made about Rs 64,824 crore in investments in the Indian share market in the recent year or so. Depositories’ data indicates that FPIs invested a total of Rs 1,82,965 crore and sold off a total of Rs 1,18,141 crore in the previous year.
