Foreign institutional investors sell nearly ₹5,000 crore worth equities in first four days of 2023

• FIIs have been selling Indian equities for ten consecutive sessions pulling out liquidity from the market.
• As a result, benchmark indices Nifty50 and Sensex have already dropped 2% each in the first week of the year.
• Meanwhile, domestic institutional investors have infused ₹1,673 crore in the first four sessions of the year.
• After strong buying in November, FIIs went on to sell Indian equities aggressively in December as rising cases of Covid-19 in China spread concerns over global economic growth.

The start to 2023 has not been smooth with foreign institutional investors (FIIs) offloading nearly ₹5,000 crore in just the first four trading sessions – continuing the selling trend seen in December – as they chase undervalued assets elsewhere.

After strong buying in November, FIIs went on to sell Indian equities aggressively in December as rising cases of Covid-19 in China spread concerns over global economic growth. In December, FIIs sold shares worth ₹14,231 crore compared to net buying worth ₹22,546 crore in November.

FIIs have been selling Indian equities for ten consecutive sessions, pulling out liquidity from the market, analysts said. As a result, the benchmark indices Nifty50 and the 30-stock Sensex have already dropped 2% each in the first week of the year.

“The major drag on the market now is the sustained selling by FIIs. FIIs sold for the 10th consecutive day yesterday, taking the cumulative selling to ₹11,400 crores. The underperformers of last year like China and Europe are doing well. Clearly, FII money is chasing lower valuations by selling in overvalued markets like India,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services.

Meanwhile, domestic institutional investors (DIIs) injected ₹1,673 crore into the market in the first four sessions of the year. Last year as well, while FIIs were busy selling equities in the market, DIIs helped prop up the markets, especially through strong inflows in mutual funds. In 2022, while FIIs sold equities worth over ₹2.78 lakh crore, DIIs infused nearly the same amount – ₹2.75 lakh crore, as per data by NSE.

Domestic Institutional Investors are institutions like insurance companies, mutual fund houses, pension funds, or provident funds.

FIIs and DIIs activity from Jan 2 - Jan 5
Data source: NSE

While FIIs were back to selling in December, DIIs bought ₹24,159 crore in December as against sales worth ₹6,301 crore in November.

“This trend (of FII selling) might continue imparting weakness in the Indian market. This trend will open opportunities for investors. FIIs will sell stocks in which they are sitting on profits, like the banking segment,” said Vijayakumar.

Going ahead, interest rate movements in the US and Europe, the spread of Covid cases and developments in China will affect the FII flows into or out of Indian markets, analysts added.


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