Non-Adani FPI flows are still in the red. Will the trend continue?

The non-Adani linked FPI flows are still muted and unlikely to turn positive anytime soon, according to experts. Following the crisis in the US and prospects of higher interest rates for longer than expected, FPIs may take a cautious stance in their approach in the coming days, they say.

Foreign portfolios have been consistent sellers this year with outflows of Rs 5,294 crore in February and Rs 28,852 crore in January. Since the start of 2023, FPIs have sold equities to the tune of Rs 22,651 crore.

This has reflected in the performance of benchmark Nifty, with March being the fourth consecutive month of negative returns. The index is down 6% so far on a year-to-date basis.

“This (inflow in March) is inclusive of the bulk investment of Rs 15,446 crore by GQG in the four Adani stocks. Excluding this, FPI activity in equities represents a strong selling undercurrent,” V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said.

“In financial services, FPIs have been alternating between buying and selling in different fortnights. Since risk off is the dominant market mood now following the bank failures in the US and fears of contagion, FPIs are unlikely to turn buyers in the near-term,” Vijayakumar said.

In terms of investing in sectors, FPIs have been consistent buyers only in capital goods.Himanshu Srivastava, Associate Director – Manager Research at Morningstar India, attributed the latest inflows to better prospects of Indian equities over longer time frames.

“Although, like many other countries, India has also been going through a rate hike cycle given high inflation levels, it is still perceived to be relatively better placed with respect to macro conditions compared with other markets,” he added.

(With inputs from agencies)

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