FPIs sold equities worth Rs 19,994 crore in 5 trading sessions of November

The Indian stock markets continue to feel the pressure from sustained selling by foreign portfolio investors (FPIs). According to the National Securities Depository Ltd (NSDL) data, FPIs have offloaded equities worth a significant Rs 19,994 crore in just the first five trading sessions of November, intensifying concerns about market stability.

The data also indicated that the highest single-day selling was recorded last Friday, with foreign investors selling shares worth Rs 5,635 crore.

This aggressive selling trend by FPIs has dragged down the major Indian indices, the Nifty 50 and Sensex, both of which have dropped by around 8 per cent since the beginning of this selling spree in October.

In October, FPIs marked their single highest monthly selling activity ever, with a record Rs 1,13,858 crore worth of shares sold through the exchanges.

The scale of this outflow highlights the cautious approach FPIs have taken towards Indian equities. However, despite this heavy selling in the secondary market, FPIs have remained active buyers in the primary market.

In October, FPIs invested Rs 19,842 crore in initial public offerings (IPOs) and other primary market opportunities, showing a selective interest in certain sectors and new companies entering the market.

Experts suggest that the volatility could continue in the near term as foreign investors realign their portfolios.

"The rally in Chinese stocks appears to have tapered off as reflected in the declining trend in Shanghai and Hang Seng indices in recent days. In view of the elevated valuations in India, FPIs may continue to sell thereby putting a cap on any possible up move in the market. Another important trend in the sectoral moves is that despite the massive FPI selling in financials, this sector is resilient since the valuations are fair and every selling is being absorbed by DIIs and individual investors, particularly HNIs" said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

This sustained FPI selling has injected a degree of uncertainty into the Indian equity markets, and experts are closely watching for signs of stabilization as domestic institutional investors try to counterbalance the outflows.