Foreign investors insist on selling, sold shares worth Rs 13 thousand crore so far in August
The main reason for the fresh withdrawal of foreign investors is the rise in the Japanese currency Yen due to the increase in interest rates by the Bank of Japan and the fear of recession in the US. If the domestic markets continue to rise in the coming time, then FPIs may insist on selling more. The reason for this is that the valuation of Indian stocks remains very high.
Amid the rise in interest rates in Japan and the fear of recession in the US, foreign portfolio investors (FPIs) have increased withdrawals from the Indian markets. This is the reason why FPIs have become net sellers in the Indian stock markets in August. According to the National Securities Depository Limited (NSDL), so far in August, FPIs have made a net withdrawal of Rs 13,431 crore from the stock markets. After this withdrawal, FPI investment in equity markets has come down to Rs 22,134 crore in the entire calendar year 2024.
Riding on the back of sustained economic growth, continued reforms, and better-than-expected quarterly results, FPIs pumped in ₹ 32,365 crore in the month of July this year into the domestic equity markets. Earlier, in June, it was ₹ 26,565 crore on account of political stability and a sharp rise in the markets.
However, this year, these are the debt or bond markets in which FPIs are continuing to invest. For the month of August itself, FPIs have so far invested Rs 6,261 crore in the debt markets. The total investment of FPIs in debt markets has swelled to Rs 97,249 crore. The total investment by the FPIs so far in 2024 has crossed Rs 1.31 lakh crore in equities, debt, and other instruments.
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services told that if domestic markets continue to rise in coming times, then FPIs may insist on selling more. The reason for this is that the valuation of Indian stocks remains very high.
The main reason for the latest FPI withdrawal is the rise in the Japanese currency, Yen, due to the increase in interest rates by Bank of Japan and the fear of recession in US. According to Himanshu Srivastava, Associate Director, Morningstar Investment Research India, the high valuation of the Indian markets is providing an attractive profit-booking opportunity to foreign investors.
Due to the fall in the domestic stock markets last week, the market capitalization of eight of the top 10 companies listed on the BSE has declined by Rs 1,66,954.07 crore. During this period, the capitalization of Reliance Industries has decreased the most by Rs 33,930.56 crore. Apart from this, the capitalization of LIC, SBI, Infosys, TCS, Bharti Airtel, ICICI Bank and HDFC Bank has also decreased. On the other hand, the capitalization of Hindustan Unilever Limited and ITC has increased.
