Mumbai: Foreign portfolio investors (FPIs) pulled out Rs 13,000 crore from Indian equity markets in the first three weeks of January. The heavy selling was due to high valuations of Indian stocks and surging US bond yields.
‘There are two main reasons why FPIs turned sellers. One, the US bond yield started rising with the 10-year yield rising from the recent level of 3.9 per cent to 4.15 per cent triggering capital outflows from emerging markets. Second, since the valuations in India are high, FPIs used the excuse of less-than-expected results from HDFC Bank to press massive sales too,’ V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.
Before this, FPIs made a net investment of Rs 66,134 crore in December and Rs 9,000 crore in November.
Meanwhile, FPIs are bullish on the debt market and invested Rs 15,647 crore in the debt market during the period under review. This came following a net investment of Rs 18,302 crore in the debt market in December, Rs 14,860 crore in November, and Rs Rs 6,381 crore in October.
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Overall, the total FPI flows for 2023 stood at Rs 1.71 lakh crore in equities and Rs 68,663 crore in the debt markets. Together, they infused Rs 2.4 lakh crore into the capital market.
Indian equities witnessed a net outflow of Rs 1.21 lakh crore by FPIs in 2022. Before the outflow, FPIs invested money in the last three years. FPIs made a net infusion of Rs 25,752 crore in equities in 2021, Rs 1.7 lakh crore in 2020, and Rs 1.01 lakh crore in 2019. FPIs took out funds worth Rs 15,910 crore in 2022, Rs 10,359 crore in 2021, and Rs 1.05 lakh crore in 2020 from debt markets.
Foreign institutional investors (FII) or Foreign portfolio investors (FPI) are those who invest in the financial assets of a country while not being part of it. On the other hand, Domestic Institutional Investors (DII) are those who invest in the country they are living in. Both types of investors can impact the economy’s net investment flows.
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