FPIs record unprecedented Rs 1.13 lakh crore sell-off in October, remain buyers in cash market

By

, ETMarkets.comLast Updated: Nov 02, 2024, 12:18:00 PM IST

Synopsis

The duality in the behavior of FPIs is explained by Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, stating that the primary market issues are mostly at fair valuations whereas the benchmark indices are trading at elevated valuations.

Marking the highest-ever monthly selling spree, the foreign portfolio investors (FPIs) in India offloaded a staggering Rs 1,13,858 crore through the exchanges in the month of October. However, they remained active buyers in the primary market for the month.

As opposed to the huge sell-off in the secondary market, the FPIs invested Rs 19,842 crore in the said time period.

The duality in the behavior of FPIs is explained by Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, stating that the primary market issues are mostly at fair valuations whereas the benchmark indices are trading at elevated valuations.

However, this relentless selling contributed hugely to the about 8% decline in benchmark indices from the peak.

“In view of the elevated valuations in India, FPIs may continue to sell thereby putting a cap on any possible up move in the market,” believes Vijayakumar.

Another important trend observed in the sectoral moves is that despite the massive FPI selling in financials, the sector is resilient since. This is explained by the fair valuations across the sector and hence, the selling is absorbed by domestic institutional investors (DIIs) and individual investors, particularly the high net-worth individuals (HNIs).

Even India’s Asian peer China also seems to return under pressure as the rally in Chinese stocks appears to have tapered off as reflected in the declining trend in Shanghai and Hang Seng indices in recent days.

On the global front, the markets will respond to the US presidential elections for a few days in the coming week, after which fundamentals like US GDP growth, inflation and rate cut by the Fed will influence the market moves.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

...moreless

...moreless