FPI selloff continues: Nearly ₹4,784 crore pulled out from Indian stock market this week amid global market volatility

Foreign Portfolio Investors offloaded shares worth ₹4,784.32 crore from May 19 to May 23, according to data released by the National Securities Depository Ltd. The selling of shares has reduced the net inflows for the month of May.

This week, the total FPI investments for May was recorded at ₹13,835 crore, a decrease from ₹18,620 crore noted last week, indicating nearly ₹4,800 crore of investments were pulled out by foreign investors in five trading sessions.

The highest selling was recorded on Wednesday, where shares worth over ₹10,000 crore were sold in a day. Notably, good inflows were recorded on Monday and Tuesday.

After the offloading of shares this week, the total net investment by foreign investors in Indian equities for this year stood at a net outflow of ₹98,516 crore. The latest data shows that foreign funds continue to remain cautious amid global uncertainty.

According to experts, the surge in sales is not due to any fundamental issues within the Indian markets, but primarily highlights external pressures.

One major factor may be the continuous volatility in international bond markets.

Ajay Bagga Banking and Market told ANI, “This one of an up down flow points to the turmoil in global bond markets impacting leveraged funds or carry trade funds to pull out some profits from the Indian markets to cover liquidity needs elsewhere.”

He added, “Another possibility is the gaming of option pricing by FPIs who came to move option premiums by buying and selling the underlying shares in the cash markets. That may explain why index heavyweights saw selling on particular days and why sharp reversals happened in the markets on two days.”

Analysts attributed these outflows as instances of "hot money" movement, quick and speculative investments, instead of any indication of weakening fundamentals in the Indian economy.

According to NSDL data, the net investments by FPIs in Indian equities stood at ₹4,223 crore in April. In March, FPIs sold stocks worth ₹3,973 crore, while in January and February, equities worth ₹78,027 crore and ₹34,574 crore were sold respectively.

(With inputs from ANI)