Indian equities remained under pressure this week, with the Nifty 50 extending its losing streak to seven weeks, its longest in six years, as elevated crude prices, rising US Treasury yields, geopolitical uncertainty and accelerating foreign portfolio investor (FPI) outflows weighed on market sentiment. 88% during the week despite a late rebound as oil prices eased and value buying emerged.
However, the headline FPI equity outflow masks a more nuanced pattern in foreign investor behaviour. While FPIs remained sellers in the secondary market, they continued to commit substantial capital to primary-market opportunities and showed selective appetite for Indian debt.
Dheeraj Gaur, Chief Investment Strategy Officer at Choice Wealth, said provisional NSE data showed FPIs were net sellers of Rs 11,490 crore in equities between September 21 and 25. However, settled depository data from NSDL/CDSL showed a net Rs 3,843 crore inflow into equities during the week.
“The underlying secondary-market trend remains cautious. “In other words, the foreign investor is not exiting Indian equities uniformly; rather, there is a clear preference for selective primary-market opportunities over broad-based secondary-market exposure,” he said.
The NSE IPO provides a clear illustration of this trend. 68x.
“This distinction is important. “It’s the same playbook.”
Debt flows remain resilientThe flow picture is not confined to equities. Settled FPI data showed a net Rs 885 crore inflow into debt-related instruments during the week.
However, the composition of the flows was significant. “This suggests that foreign demand has not disappeared from Indian fixed income, but is becoming increasingly sensitive to relative yield, currency risk and the global rate environment,” Gaur said.
Secondary-market selling continues amid selective buyingThe broader flow picture also points to continued FPI selectivity. V K Vijayakumar, Chief Investment Strategist at Geojit Investments Limited, said the trend of FPI flows turning negative after positive inflows in July and August had become evident earlier this month.
The trend of FPI flows turning negative after positive inflows in July and August was evident early this month. This trend has sustained and the total equity outflows through exchanges have touched Rs 25682 crore this month through 25th August.
