FPIs turn net sellers; withdraw ₹13,400 crore from equities in August

FPIs invest ₹22,134 crore in Indian equities, but may sell due to high valuations and global uncertainties.

After infusing money during the last two months, foreign investors have turned net sellers as they pulled out over ₹13,400 crore from Indian equities in August so far due to unwinding of the yen carry trade and recession fears in the US.

So far this year, FPIs have made a net investment of ₹22,134 crore in equities, data with the depositories showed.

Going forward, if the market continues to rise, FPIs are likely to press more sales since Indian stock valuations continue to remain elevated, particularly in relation to valuations in other markets, V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said.

According to the data, Foreign Portfolio Investors (FPIs) withdrew a net amount of ₹13,431 crore from equities so far this month (August 1-9).

This came following an inflow of ₹32,365 crore in July on expectation of sustained economic growth, continued reforms and better-than-expected earnings season, and ₹26,565 crore in June driven by political stability and the sharp rebound in markets.

Before that, FPIs withdrew ₹25,586 crore in May on poll jitters and over ₹8,700 crore in April on concerns over a tweak in India's tax treaty with Mauritius and a sustained rise in US bond yields.

The latest outflow was triggered by the unwinding of the yen carry trade after the Bank of Japan raised interest rates to 0.25% and recession fears in the US, Vijayakumar said.