FPI selling reaches Rs 23,676 crore this month amid high crude prices, global liquidity concerns

  FPI outflows from Indian equities reached Rs 23,676 crore through September 19, reversing positive flows seen in July and August. However, primary-market investments remained strong at Rs 2,703 crore this month, while elevated crude prices and bond yields weighed on sentiment 

New Delhi: The foreign portfolio investor (FPI) outflows reached Rs 23,676 crore this month via selling through the exchanges (up to September 19), indicating that FPI flows into India again turned negative after the positive flows in July and August, according to analysts.

However, the trend of FPI investment through the primary market has been continuing in September also as per early indications.

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FPI investment through the primary market this month (up to September 19) stood at Rs 2,703 crore, taking the total investment through the primary market this year to Rs 48,550 crore. This partly explains the ongoing boom in the primary market despite the tepid performance of the secondary market, said Dr VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd.

Markets ended lower last week as elevated crude oil prices and rising global bond yields weighed on investor sentiment.

Concerns over the near-term inflationary impact of higher energy prices and their implications for economic growth remained a key overhang. The Sensex declined 0.65 per cent to close at 74,294.46, while the Nifty fell 0.22 per cent to settle at 23,346.40.

The broader indices, midcap and smallcap, ended largely unchanged after a choppy week, following several weeks of outperformance, said analysts.

Crude oil prices and rising global bond yields remained the key drivers of market sentiment. The US Federal Reserve’s 25-bps rate hike further heightened uncertainty around global liquidity conditions.

Going forward, FPI flows will be significantly influenced by the ongoing Iran-US conflict and the consequent impact on crude prices.

Elevated crude prices and the high US bond yields (US 10-year yield at 5 per cent) are negatives for Indian equity market and FPI flows. However, the resilient Indian economy and expectations of better earnings growth are positives, said market participants.