FPIs snap 2-month selling streak, invest ₹12,170 crore in Indian equities; 3 key reasons behind inflows

June 22, 2024June 23, 2024 news

Foreign portfolio investors (FPIs) have finally snapped their two-month selling streak in Indian equities this month after stability returned to Indian markets with a fall in the ‘VIX’ volatility index. FPIs had halted their buying streak with the onset of the new fiscal 2024-25 (FY25). Volatility due to Lok Sabha elections 2024 and results, outperformance in Chinese markets, and other global cues have weighed on the sentiments of foreign investors.

FPIs invested ₹12,170 crore worth of Indian equities and the net investment stood at ₹25,085 crore as of June 21, taking into account debt, hybrid, debt-VRR, and equities, according to National Securities Depository Ltd (NSDL) data. The total debt inflows stand at ₹10,575 crore till the third week of June.

‘’It is interesting to note that this net sell figure is composed of selling through the exchanges for ₹45,794 crore and buying through the ‘primary market and others’ for ₹34,600 crore. Clearly, FPIs are selling where valuations are high and buying where valuations are reasonable,” said Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

Why did FPIs snap selling streak in June?

The first week of June witnessed massive volatility in FPI flows in response to exit polls and the actual election results. FPIs bought equity for ₹6,521 crore on June 3 in response to exit polls. But when the actual results fell far short of what the exit polls indicated, the market crashed on June 4th and FPIs, too, panicked and sold stocks for ₹12,259 crore, according to Dr. V K Vijayakumar.