FPIs Sucked Out Over Rs 8,000 Crore From Indian Equities In April
The key feature of the current bull run: FIIs sell as US bond yields rise but are overwhelmed by DII and retail buying, forcing FIIs to buy the same stocks they sold earlier at higher prices later.
Foreign investors became net sellers of Indian equities in April due to a surge in US Treasury yields, as hopes of an interest rate cut by the Federal Reserve receded. This move comes amid increased geopolitical tensions, reflecting a careful approach by investors even as the market continues to hit fresh record highs.
Overseas institutional investors offloaded $1036 million, or Rs 8,671 crore, worth of stocks in April, according to data from the National Securities Depository Ltd.
Overseas investors were the second most sellers of Indian equities in April among emerging markets after Taiwan. According to Bloomberg data, India witnessed outflows worth $1.32 billion during the month.
A significant feature of the ongoing bull run is that the FIIs are consistently being outsmarted by the DIIs and retail investors. The FIIs have been selling every time US bond yields go up, particularly when the 10-year yield rises above 4.5%. But the DII and retail buying have been completely overwhelming the FII selling, forcing the FIIs to buy the same stocks they sold earlier at higher prices later, according to VK Vijayakumar, chief investment strategist at Geojit Financial Services.
"Also, short covering by FIIs has contributed substantially to the recent surge in the market. The takeaway from this trend is that the bulls are calling the shots in this market, and, therefore, every dip will be bought," Vijayakumar said.
Foreign inflows into India's debt market turned negative in April for the first time in over a year, even as it awaits its global inclusions in the coming months. The month's net outflow comes as domestic stock markets scale new highs on positive macroeconomic factors.
So far this month, foreign portfolio investors have turned net sellers by offloading Rs 10,949 crore of government securities, according to data from the National Securities Depository Ltd., updated till the previous trading day.
