Foreign institutional investors’ trend in the Indian equity market for October 2023

Looking at the data on Foreign Institutional Investors (FIIs), there is a noticeable trend of net selling in Indian equities during October 2023. FIIs have consistently been selling Indian stocks, with a total net selling of approximately Rs. 26,692.16 crore in the month of October 2023. This level of selling is the highest since January 2023.

Despite the current trend of selling, FIIs maintain a positive long-term investment outlook in India. The reasons for selling appear to be driven by short-term global factors and concerns rather than a lack of confidence in the Indian market itself.

Domestic Institutional Investors (DIIs) have provided support to the Indian stock market by purchasing stocks in the cash segment worth Rs. 25,105.86 crore in October 2023. Their investments have partially offset the impact of FIIs’ selling.

Investors should closely monitor these factors and the evolving global economic conditions to make informed decisions in the Indian stock market.

Several factors have contributed to this trend:

The Israel-Hamas conflict, along with the possibility of other countries becoming involved, has made foreign investors more cautious. This conflict can affect world markets and make people more hesitant to take risks. Additionally, the increase in oil prices due to the conflict is causing concerns, as higher oil prices can impact India’s trade and increase the cost of goods.

Rising US bond yields have made US bonds more attractive to investors, leading them to divert their investments away from Indian stocks. A strong US dollar is also making it more expensive for foreign investors to put money into India.

Global economic worries and cautious investor sentiment are leading foreign investors to reduce their investments in emerging markets like India.

The relatively high valuation of Indian stocks compared to other emerging markets is also influencing foreign investors to sell more of their Indian investments, as expensive stocks tend to make investors more cautious.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.