Foreign investors continue to pull out of Indian stocks, sell equities worth ₹3,431 crore in Feb so far

• Analysts say that FIIs have been moving out from India and buying assets in other Asian markets.
  
• In January, FIIs sold equities worth ₹41,465 crore, up from ₹14,231 crore in December.
  
• Amid strong outflows impacting investor sentiment, the rupee also witnessed a sharp decline against the greenback.
  
• As a result, the benchmark indices Nifty50 have already dropped 2.4% while the 30-stock Sensex has slipped 1% in 2023 so far.
  

Foreign institutional investors (FIIs) continue to sell Indian stocks in February, with the sell-off adding up to ₹3,431 crore in just the first four trading sessions. The selling trend seen in January and December continues, as they chase undervalued assets elsewhere.

Analysts say that FIIs have been moving out from India and buying assets in other Asian markets.

“The massive FPI selling in Indian markets impacted market sentiments. FPIs are selling in India and buying in cheaper markets like China, Hong Kong and South Korea where valuations are attractive. This “short India and long other cheaper markets” strategy has led to big underperformance of the Indian market, so far this year,” said V K Vijayakumar, chief investment strategist at Geojit Financial Services.

In January, FIIs sold equities worth ₹41,465 crore, up from ₹14,231 crore in December. On the other hand, they were net buyers in November, purchasing equities worth ₹22,546 crore.

Amid strong outflows impacting investors sentiment, rupee also witnessed a sharp decline against the US dollar. FII flows and RBI rate hike this week are two important factors that will influence the currency this week.

This comes after strong buying in November last year, as FIIs went on to sell Indian equities aggressively in December as rising cases of Covid-19 in China spread concerns over global economic growth.

As a result, the benchmark indices Nifty50 have already dropped 2.4% while the 30-stock Sensex has slipped 1% in 2023 so far.

Meanwhile, domestic institutional investors (DIIs) injected ₹5,368 crore into the market in February for the first four sessions of the month. While FIIs were back to selling in December, DIIs bought ₹24,159 crore in December as against sales worth ₹6,301 crore in November.

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

FIIs and DIIs activity from Feb 1-Feb 6


Data source: NSE

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