Foreign investors have pumped ₹7,200 crore into Indian equities so far this month. This came after a net outflow of ₹5,294 crore in February and ₹28,852 crore in January, making it the worst outflow since June 2022, when they had pulled out ₹50,203 crore.
Prior to that, FPIs infused a net amount of ₹11,119 crore in December, PTI reported, quoting depositories data.
The inflow in March is inclusive of the bulk investment of ₹15,446 crore by GQG Partners in the four Adani stocks. Excluding this, FPI activity in equities represents a strong selling undercurrent. In the calendar year 2023, FPIs sold equities to the tune of ₹26,913 crore.
During March, FPIs have been sellers in most emerging markets, including the Philippines, South Korea, Taiwan, and Thailand, except China, which continues to witness inflows due to the opening-up of trade.
Going ahead, FPIs are likely to be cautious in the near term since there is a risk-off sentiment in equity markets globally due to the stress in the US banking system and the crash in banking stocks, VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.
The stress appeared in the US banking system after the collapse of Silicon Valley Bank and Signature Bank earlier this month. Most global equity markets witnessed a sharp recovery, even as macro sentiments remained volatile as frailties in European and US banks were under focus, he added.
"In India, inflows will be mainly targeted at domestic economy-facing sectors like banking, capital goods, and autos".
“A contrarian trend in favour of IT and pharmaceuticals is likely in the near term since the valuations of these segments have turned attractive after the recent corrections,” said Geojit's Vijayakumar.
"On the economy front, the US Federal Reserve increased the Fed Fund rates by 25 basis points while voicing confidence in the stability of the US financial system." "FPI flows are expected to remain volatile given the tight central bank monetary policy," Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd, said.
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