FIIs to make $16 billion if market goes up 2% on Monday: Samir Arora

Foreign portfolio investors (FPIs) have continued to divest from Indian markets since scaling back their purchasing activity at the start of the new fiscal year 2024-25 (FY25).

According to Samir Arora, founder of Helios Capital, FIIs are likely to make up over $16 billion, expecting the market to rally around 2 per cent on Monday, June 3.

“FIIs have more than US$ 800 billion in Indian stocks. If market goes up 2% they make US$ 16 billion tomorrow. How much do u think they lose on their shorts,” Arora said in a post on social media platform X, on June 2.

Also read: Why did FPIs dump ₹25,586 crore worth of Indian shares in May—Explained with 4 key reasons

Arora further added that the FII category does not get squeezed generally. “FII as a category does not get squeezed- except some individual fund here or there (which happens all the time),” he said.

The sentiments of foreign investors have been impacted by the volatility stemming from the Lok Sabha elections in 2024, a more aggressive stance taken by global central banks, the strong performance of Chinese markets, and various other global indicators.

FPIs divested Indian equities valued at ₹25,586 crore, with a total outflow reaching ₹12,911 crore by May 31, encompassing debt, hybrid, debt-VRR, and equities, as per data from the National Securities Depository Ltd (NSDL). Concurrently, debt inflows for May 2024 amount to ₹8,761 crore.

FIIs to buy or sell on Monday?

FPIs are likely to turn buyers in June if the election results ensure political stability, according to V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.

“Another reason was the spike in US bond yields. Whenever the US 10-year bond yields rose above 4.5 % FPIs sold in emerging markets like India and moved money to bonds. These two factors triggered the selling of equity in India. FPI activity in June will be crucially influenced by the election results to be announced on June 4th and the market response to that. If the election results ensure political stability the market is likely to respond positively to that. FPIs also are likely to turn buyers in such a scenario. However, in the medium term US interest rates will exert more influence on FPI flows,” Vijaykumar said.

However, this could change the colour of the market, Raamdeo Agrawal, Chairman and Co-founder of Motilal Oswal Group, was quoted as saying by CNBC TV18.

Also read: Indian stock market: How is market expected to open on Monday post exit polls, GDP data?

"This party which is starting with the declaration of results is not going to be over just in a day or two. There could be corrections, there could be selling by FIIs, but it is a much longer party and larger party," he said.

Agrawal asserts that short sellers will face pressure and have just two options: either close their positions by tomorrow or hold until June 4, banking on the possibility that the actual election outcomes might not align with the favorable projections from exit polls.

“My sense is they will panic and tomorrow they will come to cover their positions. Domestics – in any case – were buying. My sense is that tomorrow market should be quite firm and may open 3-4% higher,” he said.