FPIs dump Indian equities in May amid election uncertainty
Equity outows of FPIs touch ₹17,083 crore so far in May; Market volatility rises with the fear gauge India VIX touching 18.4, its highest level this year
Foreign Portfolio Investors (FPIs) have turned aggressive sellers in Indian equities in May 2024, largely spooked by the uncertainty over the outcome of general elections. They now favour the ‘Sell India, Buy China’ trade due to cheaper valuations in Chinese and Hong Kong markets, said market analysts.
FPIs have net sold Indian equities to the tune of ₹17,083 crore so far in the seven trading sessions in May 2024, taking their overall outows in equities from India this calendar year to ₹14,861 crore, data with depositories showed.
V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said FIIs’ sales in the cash market in May was much higher at ₹24,975 crore.
VIX at peak
He said that the situation could change dramatically once clarity emerged on the election outcome. “If the election results turn out to be favourable from the market perspective, aggressive buying by DIIs, retail and HNIs can push the market sharply up,” Mr. Vijayakumar noted. The volatility index (VIX) — also known as a fear gauge — touched 18.4 (the highest in 2024) this past week as equity benchmarks saw sharp corrections in both benchmark indices and broader markets. So far in May, Nifty50 has slid 2.5%, falling about 500 points.
Tarun Singh, MD of Highbrow Securities, said market volatility, reected by the India VIX, underscores the selling pressure, primarily aªecting overvalued large-cap stocks.
“The temperament of FPIs, largely speculative and focused on ephemeral gains, overlooks the broader, long-term growth narratives of economies like India or Hong Kong. Despite current valuations rendering India’s market relatively expensive, forthcoming electoral outcomes hold the potential to recalibrate foreign investor interest. This adjustment could foster a decrease in market volatility, anticipated to reect in the VIX’s stabilisation
State-owned Union Bank of India on Saturday reported 18.4% growth in consolidated net prot for the March quarter to ₹3,328 crore, helped by lower provisions.
For FY24, the lender reported a consolidated net prot of ₹13,797 crore against ₹8,512 crore in the year-earlier period.
Fourth-quarter standalone net prot rose to ₹3,311 crore, from ₹2,782 crore a year earlier.
Core net interest income (NII) grew 14.4% to ₹9,437 crore on 11.7% growth in advances and widening of net interest margin (NIM) to 3.1% from 2.97% in Q4 FY23.
MD and CEO A. Manimekhalai told reporters that for FY25, the bank was aiming for credit growth of 11-13% and deposit growth to be between 9-11% compared with 9.3% in FY24.
It, however, expects a fall in NIM to 2.8-3%, she said, adding that the targets