FPIs outflow recorded at Rs 13,000 crore from stocks in India

FPIs: The foreign portfolio investors (FPIs) have decided to offload domestic equities worth Rs 13,000 crore in the first three weeks of 2024 due to high valuations of stocks in India and surging US bond yields.

In contrast, foreign investors are still bullish on the debt market and have infused Rs 15,647 crore in the debt market during the same period,according to media reports. 

Reportedly, the foreign portfolio investors made a net investment of Rs 13,047 crore in the country's equities till January 19, 2024. 

They pulled out over Rs 24,000 crore from equities between January 17 - January 19. Earlier, the FPIs made a net investment of Rs 66,134 crore in December and Rs 9,000 crore in November last year.

"There are two main reasons why FPIs turned sellers. One, the US bond yield started rising with the 10-year yield rising from the recent level of 3.9 per cent to 4.15 per cent triggering capital outflows from emerging markets," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, citing media reports. 

"Second, since the valuations in India are high, FPIs used the excuse of less-than-expected results from HDFC Bank to press massive sales too," he said. 

The extensive selling by FPIs could be credited to offloading their stake in HDFC Bank after its lower than expected quarterly results, Himanshu Srivastava, Associate Director for Manager Research at Morningstar Investment Research India said, citing media reports.

FPIs started the new year with a cautious approach opting to book profits in the Indian equity markets as key stock indices touched all-time high levels, he said.

FPIs also stood as big sellers in the rest of the emerging markets like South Korea and Hong Kong.

The foreign investors have also been buying IT stocks this month after the management commentary following the Q3 results of IT managers brought optimism of demand revival in the sector.

Overall, the total FPI flows for 2023 stood at Rs 1.71 lakh crore in equities and Rs 68,663 crore in the debt markets. Together, they injected Rs 2.4 lakh crore in the capital market.