FIIs’ Flight: Some funds exit India but most stay invested

Mumbai (IANS)┬áConsecutive sessions of FIIs’ selling might have spooked market participants, but analysts cite that most foreign players have remained interested and invested in India’s equity market.

Accordingly, the FIIs have net sold over Rs 6,800 crore from the equity markets in the last four sessions, the longest exit spree since March and September.

However, analysts said that FIIs have in total invested about Rs 1.25 lakh crore since November 2020.

Besides, concerns over the Centre’s ability to expand fiscal spend in the Budget FY22 to usher in faster growth has been cited by analysts as one of the reasons for FIIs’ exit.

“Profit booking is a natural phenomenon. If the net inflows are seen, then FIIs invested around Rs 1.25 lakh crore in the market from November-January. But they have only taken out some Rs 6,000 crore lately,” said Siddhartha Khemka, Head, Retail Research, Motilal Oswal Financial Services.

“All the major factors like Biden presidency, vaccination drive, Q3 results have all been factored in apart from the Budget 2021-22. However, these are early days and if prepared smartly than the Budget can also give a further upside to the FIIs to remain invested.”

According to HDFC Securities’ Retail Research Head Deepak Jasani: “FPIs have been sellers on more days lately, however their quantum of selling is still not very large. They seem to be of the view that the Indian markets’ valuations now seem to be fair and upside from here may be limited.”

“Till the corporate earnings growth momentum picks up and sustains, this feeling may sustain.”

Lately, global flood of liquidity along with near zero interest rates in foreign markets, a faster-than-anticipated domestic macro recovery, expectations of healthy Q3 results and an expedited vaccine roll-out programme accelerated FIIs’ investments into the market.

Consequently, the two key indices — S&P BSE Sensex and the NSENifty50 — made massive gains.

On Thursday, FIIs were net sellers to the tune of Rs 3,712.51 crore in BSE, NSE and MSEI in the capital market segment.

In the previous session on Wednesday the FIIs net sold Rs 1,688.22 crore.

“This is profit booking and a healthy correction. Corrections are desirable and make the market healthy. It seems the market is a bit apprehensive of some possible new taxes, like the rumoured Covid Tax,” said Geojit Financial Services’ Chief investment Strategist V.K. Vijayakumar.

“If there are no new taxes and disappointments in the Budget, FIIs will resume investment with a bang. If this happens, short covering can take the Sensex again beyond 50,000.”

In addition, CapitalVia Global Research’s Senior Research Analyst Likhita Chepa said “Increasing volatility due to monthly expiry and Union Budget 2021 might be the factors leading the FIIs to book their profits.”

“Investors look quite cautious in their moves. Also, weak global sentiments are leading to the uncertainty in the markets globally.”

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