Foreign investors have been reducing their exposure to Indian equities by selling equities worth Rs 7,769.73 crore in just the last week (August 12 to 17). This activity has caused their net investment for August to turn negative, signaling a shift in the investment.
Now the Foreign Portfolio Investors (FPIs) have sold net equities worth Rs 21,201 crore during August, indicating a substantial withdrawal from the Indian markets.
The data from the National Securities Depository Limited further reveals that foreign investors have become net sellers, offloading a hefty Rs 32,684 crore worth of equities through stock exchanges.
Interestingly, while foreign investors have been aggressively selling on exchanges, they also invested Rs 11,483 crore through the primary market and other categories.
This dual approach suggests that while they are reducing their holdings in certain areas, they are still finding selective opportunities for investment.
Market experts have noted that this trend of selling by foreign investors is likely to persist in the near future. One of the main reasons cited for this behaviour is the high valuation of the Indian markets.
Currently, Indian stocks are considered among the most expensive in the world, which is prompting foreign investors to seek better value in other, less expensive markets.
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, highlighted this reasoning by stating, “In August till 17th, FPIs have sold equity for Rs 32,684 crores through the exchange even while investing Rs 11,483 crores through the primary market & others category. 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.”
He also mentioned that this pattern is expected to continue even if the Indian market becomes more bullish due to easing concerns about a possible U.S. recession.
Interestingly, at a time when overseas investors were net sellers in Indian equities, domestic institutional investors remained net buyers, largely compensating for the outflows by foreign investors.
According to NSE data, the net gross purchase by domestic investors (DIIs) in August stands at Rs 34,060.09 crore.