Foreign portfolio investors (FPIs) aggressively offloaded Indian stocks in January, marking a significant shift in sentiment after two consecutive months of robust accumulation in November and December. According to the latest data from the National Securities Depository Limited (NSDL), FPIs divested Indian stocks amounting to Rs 25,744 crore during the month.
This selling spree by FPIs has triggered marginal corrections in Indian benchmark stock indices. In contrast, December witnessed a flurry of FPI activity, with a cumulative investment of Rs 66,135 crore in Indian stock markets.
“FPI inflows in debt have sustained, supported by India’s inclusion in JP Morgan bond index and potential inclusion in Bloomberg EM Local Currency indices, and have largely offset the equities outflows,” reported CARE Ratings.
To contextualize, the entire year experienced an inflow of approximately Rs 171,107 crore, with more than one-third of it flowing in during December. These substantial fund inflows in the previous months had propelled benchmark stock indices to reach all-time highs. In November, FPI inflows were recorded at Rs 9,001 crore, as per NSDL data.
Before the influx in November, FPI participation in Indian stocks was tepid, and they had turned net sellers. September and October saw FPIs selling Rs 14,768 crore and Rs 24,548 crore, respectively. Prior to that, in the months of March, April, May, June, July, and August, FPIs had bought Indian stocks worth Rs 7,936 crore, Rs 11,631 crore, Rs 43,838 crore, Rs 47,148 crore, Rs 46,618 crore, and Rs 12,262 crore, respectively.
As FPIs unwind their positions in January, market analysts are closely watching for the potential impact on Indian equity markets and whether this trend will continue in the coming months.
