FPIS sell `17,083 cr of equities in May so far; ‘likely to continue’

Foreign portfolio investors (FPIS) net sold Rs 17,083 crore of Indian equities in May so far amid hardening of US bond yields and outperformance of Chinese and Hong Kong markets.

According to data provided by National Securities Depository Ltd (NSDL), FPIS, on a gross basis, purchased Rs 108,959 crore worth of equities and sold Rs 126,042 crore till May 10. In April, overseas investors dumped Rs 8,671 crore of domestic shares.

Heavy selling by FPIS also contributed to the fall in benchmark stock market indices, Sensex and the Nifty 50, which declined by 2.6 per cent each, in the current month.

Geojit Financial Services Chief Investment Strategist V K Vijayakumar said that a major trend in the market is the aggressive selling by FIIS (foreign institutional investors) so far this month. It is important to understand that there is a new factor triggering FII selling, apart from the high US bond yields. This is the outperformance of the Chinese and Hong Kong markets.

“During the last one month while Nifty is down 1.5 per cent the Shanghai Composite is up by 2.62 per cent and Hang Seng is up by a whopping 8.8 per cent. Chinese and Hong Kong markets are cheap with PES (price to earnings) around 10 while India is expensive with double the PE of these markets,” Vijayakumar said.

So long as this outperformance of the Chinese and Hong Kong markets continue, FIIS are likely to sell. The weakness in frontline financials is primarily due to FII selling, he said.

Though domestic institutional investors (DIIS) are buying they are not as aggressive as they were due to some concerns surrounding election results.

In the debt market, FPIS net bought Rs 43,307 crore and in the debt-vrr (Voluntary Retention Route), they purchased Rs 7917 crore, NSDL data showed.