While FIIs had been offloading Indian equities in the earlier part of the month, the pace of selling had already started to ease. As of March 21, total FII outflows for the month stood at Rs 31,718 crore, but a visible change in direction has since emerged.
According to Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investment Services, “Recent activity shows a change in FII strategy in India. After relentless selling FII turned buyers during a few days last week with a big buy figure of Rs 3255 crores through the exchanges on 21st March.”
The intensity of FII selling had started declining earlier.” He added that the sentiment in the debt market also remains positive, with continued inflows into fixed-income instruments. “The trend of FII buying in debt continued with total debt investment of Rs 10,955 crores in March through 21st,” Vijayakumar noted.
This reversal in FII activity has played a role in lifting market sentiment. “The recent reversal in FII selling has turned the market sentiments for the better, facilitating a rally in the market for the week ended 21st March,” he said.
Also read: IT sector sees highest foreign outflows at Rs 6,934 cr in March. Here’s how other sectors fared
He attributed the change in investor mood to improving domestic fundamentals and global cues.
“It can be argued that positive domestic fundamentals like pick up in growth and decline in inflation coupled with weakness in the dollar have contributed to the change in FII strategy,” he concluded.
The return of foreign investors, especially in such significant volumes, could provide further support to India’s bullish equity run in the near term.
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