FPIs upbeat on primary market

Mumbai: Foreign Portfolio Investors (FPIs) have sold equity worth Rs32,684 crore (till August 17) through the stock exchange, while investing Rs11,483 crore through the primary market and others category, industry data said on Saturday.

According to market watchers, this trend is likely to continue since India is the most expensive market in the world now and it is rational for FPIs to sell here and move the money to cheaper markets.

The picture doesn’t change even if the market turns more bullish on fears regarding US recession receding, they added. According to Vipul Bhowar, Director Listed Investments, Waterfield Advisors, globally, concerns about the unwinding of the Yen carry trade, potential global recession, slowing economic growth, and ongoing geopolitical conflicts led to market volatility and risk aversion.

“Domestically, after being net buyers in June and July, some FPIs might have chosen to book profits following a strong rally in previous quarters. Additionally, mixed quarterly earnings and relatively higher valuations have made Indian equities less attractive,” said Bhowar.

Despite these factors, India’s strong economic performance, including GDP growth, reduced fiscal deficit, manageable current account deficit, and strong sector growth and industrial production, continues to attract many FPIs, indicating that FPI flows into India should persist, said experts. The primary market issues are at comparatively lower valuations, while in the secondary market the valuations continue to remain high.

That is why FPIs are buying when securities are available at fair valuations and selling when the valuations get stretched in the secondary market. In the last 12 months or so, FPIs invested more than Rs64,824 crore in the Indian share market. As per data by depositories, FPIs total investment was Rs1,82,965 crore, and a total sell-off of Rs 1,18,141 crore last year.

Before that, FPIs withdrew Rs 25,586 crore in May on poll jitters and over Rs 8,700 crore in April on concerns over a tweak in India’s tax treaty with Mauritius and a sustained rise in US bond yields.