Domestic stock markets witnessed an inflow of Rs 13,540 crore from foreign portfolio investors (FPIs) in March for the first time so far in calendar year 2023.
After witnessing capital outflows of Rs 34,146 crore in January and February, FPI investment turned positive, helped by the bulk of investments of Rs 15,446 crore by GQG Partners in four Adani group stocks.
However, as there was a net outflow of Rs 8,367 crore from the debt market in March, the net inflow during the month stood at Rs 6,357 crore so far, according to data available from NSDL. Net outflows from debt and equity markets in 2023 stood at Rs 24,326 crore, according to NSDL.
Following the exit of the GQG investment, FPIs continued to sell off in India in March, although the intensity of selling has eased. “An important feature of FPI activity is that there is no consistency in FPI activity. For example, FPIs were buyers in the first half of February in financial services and sellers in the second half,” said VK Vijayakumar, chief investment strategist, Geojit Financial Services.
Similarly, they were buyers in IT in the first half and sellers in the second half. In the case of oil and gas, in the first half of the year there were sellers, and in the second half, there were buyers. “All data refer to February. This shows that their activity was not in response to the performance or prospects of these sectors. A consistent trend is that FPIs have been buyers of capital goods stocks. This explains the strength in the capital goods segment even in a weak market,” Vijayakumar said.
The collapse of the SVB bank in the US affected market sentiment. FPIs are likely to be cautious in their approach in the coming days, an analyst said. The sell-off in US markets late last week was triggered by a 60% drop in SVB, which mainly funds start-ups. “This weighed on sentiment and banking stocks were hammered by concerns that rising interest rates could trigger loan defaults.” This is a US specific issue and will have no impact on Indian banking stocks. But the impact on sentiment can be negative,” says an analyst.