FPIs sell Indian equities worth ₹5,294 crore in February
1 min read . Updated: 06 Mar 2023, 06:01 PM IST
PremiumThe foreign portfolio investors (FPIs) have offloaded equities to the tune of ₹5,294 crore for a second consecutive month in February.
The foreign portfolio investors (FPIs) continued to sell Indian equities in February, however, the pace of selling moderated in the month after hitting a seven-month high in January, according to data from National Securities Depository (NSDL).
The foreign portfolio investors (FPIs) have offloaded equities to the tune of ₹5,294 crore for a second consecutive month in February. However, the magnitude of the selling moderated compared to January's sale of ₹28,852 crore worth of stocks.
The selling in January was mainly due to reallocation of funds to China and Taiwan and the uncertainties from a sharp selloff in Adani Group shares.
Foreign investors have trimmed their investments from emerging markets such as India to raise exposure to China due to attractive valuations, said independent market expert Mehraboon Irani, reported Reuters.
The Nifty 50's price to earnings (P/E) ratio stood at 26.31 as of March 6, compared to FTSE China A50's 13.95 and 11.30 for Hong Kong's Hang Seng index.
A lower relative P/E ratio indicates attractive valuations while a higher P/E implies expensive valuations.
With domestic earnings also likely to remain muted for the next few quarters due to high interest rates, foreign investors may take a while to buy Indian equities as they expect valuations to fall further, Irani added.
FPIs sold nearly 50 billion rupees worth of shares in the oil and gas sector in February followed by power and metal stocks. Capital goods, information technology and services stocks saw renewed buying interest from FPIs.
Buying in debt market
Meanwhile, foreign investors were net buyers in the debt market. In February, the inflow in the debt market is about ₹2,436 crore. In January, the inflow was around ₹3,531 crore.
Year-to-date, FPIs outflow in the equity market is approximately ₹25,207 crore, NSDL data showed.
Nifty 50 fell 2% in February on sustained foreign selling, extending losses for a third month in a row.
On five similar occasions in the past, the Nifty has rebounded after three successive months of losses. But analysts warned it could be different this time around due to a prolonged high interest rate trajectory.