FPIs Withdraw Rs 4,784 Crore From Indian Equities Amid Volatile Bond Market

Foreign Portfolio Investors (FPIs) turned into net sellers in the Indian equity markets this week, offloading shares worth Rs 4,784.32 crore between May 19 to May 23, as per data released by the National Securities Depository Ltd (NSDL).

What Does NSDL Data Show?

While this selling has reduced net inflows by a significant amount of money for the month of May, the total FPI investment as of this week, stands at Rs 13,835 crore, down from Rs 18,620 crore reported during the last week.

This shows that nearly Rs 4,800 crore of investment was pulled out by foreign investors in five trading sessions.

While the week started on a positive note with good inflows recorded on Monday as well as Tuesday, the sharpest selling was witnessed on Wednesday, May 21, when FPIs sold shares worth more than Rs 10,000 crore in a single day.

What Is Triggering The Withdrawal?

According to experts, this selling trend may not be due to any fundamental issues within the Indian markets, but more likely due to external pressures.

One primary reason behind this could be the ongoing turmoil in global bond markets.

As per banking and market expert Ajay Bagga, cited by an ANI report, "This one of an up down flow points to the turmoil in global bond markets impacting leveraged funds or carry trade funds to pull out some profits from the Indian markets to cover liquidity needs elsewhere."

"Another possibility is the gaming of option pricing by FPIs who came to move option premiums by buying and selling the underlying shares in the cash markets. That may explain why index heavyweights saw selling on particular days and why sharp reversals happened in the markets on two days," he added.

As per analysts, these outflows indicate instances of "hot money" movement, rather than any weakening fundamentals in the Indian economy.

Additionally, the NSDL data highlighted that net investments by FPIs in Indian equities stood at Rs 4,223 crore during April, which indicates a turnaround in foreign investment trends.

In the last month, FPIs had sold stocks worth Rs 3,973 crore in March. Further, in January and February, FPIs had sold equities worth Rs 78,027 crore and Rs 34,574 crore, respectively.

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