On Friday, the FIIs off-loaded domestic stocks worth Rs 4,294.69 crore triggering a fall in the markets. The frontline index Nifty ended with a decline of 0.44% while the S&P BSE Sensex closed with cuts of 0.26%.
With the exception of December when the foreign investors bought shares worth Rs 15,446 crore, the trend has been one of selling. In just two months of October and November they net sold domestic equities amounting to Rs 115,629 crore. For the full year ended December 31, they bought equites worth just Rs 427 crore.
Commenting on the current trends, Dr. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services said that FII’s have continued their selling despite many positive developments including a good budget, rate cut by the RBI and slight improvement in Q3 results. “Since largecaps dominate the assets under custody of FIIs, largecaps have been facing the brunt of FII selling. Relentless selling in largecaps has made their valuations attractive, opening up opportunities for long-term investors,” he said.In his view, any reversal in FII strategy will happen only when the dollar index moves down and it will be difficult to know when that would happen.
Meanwhile, Vipul Bhowar, Senior Director – Listed Investments, Waterfield Advisors said that the recent shifts in global policies, especially those emerging from the US, are invoking a sense of uncertainty among the FIIs, which in turn is reshaping their investment strategies in dynamic markets like India.
“The allure of US assets has intensified, driven by rising bond yields that have made these investments seem more secure. This has led many FIIs to pivot away from Indian and other emerging market stocks. Investors are increasingly drawn to the promise of safer returns offered by U.S. equities, leaving many markets, including India, in their shadow,” he added.
Compounding this trend is a noticeable slowdown in corporate sales growth within India, further fueling the exodus of capital from Indian equities, he said, highlighting the domestic pain points.
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