FIIs Sell Equities Worth Rs 20,000 Crore In Five Sessions: Here's What Triggered The Selloff
The fall is temporary and with a positive earnings season ahead, foreign flows should be back on track, according to market watchers.
Foreign investors offloaded stocks worth nearly Rs 20,000 crore in the last five sessions amid domestic and global factors, such as amendment to the India-Mauritius tax treaty and conflicts in West Asia. This also comes amid muted fourth-quarter earnings of Indian tech firms and the upcoming Lok Sabha elections.
These investors sold equity worth Rs 19,894.03 crore in the last five sessions and Rs 4,130.94 crore for the month so far, according to provisional data from the National Stock Exchange. They, however, remain net buyers of Indian equities worth Rs 5,639 crore so far this year, according to data from the National Securities Depository Ltd.
Overseas institutional investors had mopped up Rs 35,098 crore worth of stocks in March.
The benchmark NSE Nifty 50 and the S&P BSE Sensex declined 1.65% and 1.56%, respectively, in the week ended April 19—their worst fall in over a month—with all sectors ending in the red. The IT and banking stocks declined the most in this period.
The fall is temporary and with a positive earnings season ahead, foreign flows should be back on track, according to market watchers.
The delay in rate cuts and geopolitical tensions are prompting the sell-off by foreign investors, according to Ajit Mishra, senior vice president of research at Religare Broking. "We feel this would gradually fade away and positive surprise from the earnings may expedite the same."
Further, the majority of the inflows that were expected for the election is already priced in, and the possibility of rate cuts may reverse the trend of outflows, Mishra said.
While global funds have been on a selling spree, domestic investors kept infusing money into equities. Domestic institutions mopped up equities worth Rs 15,377.86 crore during the last five sessions and have remained net buyers for the month.
India and Mauritius have agreed to amend the double taxation avoidance agreement between the two nations. As a result, investments coming into India via Mauritius will face closer scrutiny. Meanwhile, the global markets have been in turmoil as investor sentiment was dampened, following the Iran-Israel conflict.
Foreign inflows in the debt market have also paused, with a net outflow of Rs 6,174 crore for the month so far.
