Foreign portfolio investors (FPIs) were net sellers in the Indian markets to the tune of Rs 949 crore in the first half of November. As per the depositories data, they pulled out Rs 4,694 crore from equities between November 1-12.
At the same time, they pumped Rs 3,745 crore in the debt segment. This translated into total net withdrawal of Rs 949 crore.
In October, FPIs remained net sellers at Rs 12,437 crore. FPIs have been worried about higher valuations of Indian equities, which continue to trade near all-time high levels, said Himanshu Srivastava, Associate Director - Manager Research, Morningstar India. FPIs sitting on profit, would have chosen to book the same which is reflected in the flow trend over the last few weeks, he said. Additionally, concerns over the global inflationary pressure and slowdown in some of the developed economies are also cause for concern, he said.
"It appears that FPIs are exiting on valuation concerns. The important point to note is that the old scenario where FPIs representing smart money dictated market trends is over for the present...We are in a period of uncertainty," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services. For debt segment, Srivastava said, "The flow trend has largely been driven by the direction of USD and US treasury yields. FPIs tend to park their investments in Indian bonds for short term when they adopt a wait-and-watch approach towards Indian equities." FPI flows in November were positive so far for Indonesia, the Phillipines, South Korea, Taiwan and Thailand to the tune of USD 78 million, USD 47 million, USD 203 million, USD 1,565 million and USD 59 million, respectively, noted Shrikant Chouhan, head of equity research retail, Kotak Securities.
Going forward, Chouhan said FPI flows may remain volatile in the emerging markets on account of the sharp increase in global energy prices and prospects of elevated prices may pose another source of risk to global and domestic inflation.