FPI selling in cash market tops ₹1 lakh crore

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Indices fell for the fifth straight session on Friday to near two and half month lows amid relentless selling by foreign portfolio investors (FPIs), weak second quarter results and rising treasury yields in the US.

FPI selloff in the cash market in October nudged past ₹1 lakh crore, the first time this figure has been surpassed in a month, provisional data showed. In the year to date, the investors have offloaded shares worth over ₹2.2 lakh crore. Lofty valuations, weak domestic results and the “Buy China, Sell India” trade has led to the exodus of hot money.

Foreign fund flows into China continued for the fifth straight week, with $576 million of inflows — markedly lower than $2.2 billion in the previous week and $9.3 billion the week before, according to Elara Global Research. Global fund flow for India slowed sharply, with a small outflow of $51 million from India dedicated funds this week, the second such outflow since March 2023. India dedicated midcap funds have now seen consistent outflows for 16 weeks in a row starting July 2024.

The Sensex fell 663 points, or 0.8 per cent, to 79402, while the Nifty slipped 0.9 per cent to 24180 on Friday. The benchmark indices closed lower for the fourth consecutive week, slipping 2.7 per cent and 2.2 per cent, respectively. Mid- and small-caps indices plunged 5.2 per cent and 7.4 per cent for the week.

Key losers

Except FMCG and healthcare, all indices were in the red with consumer durables, oil and gas, metals, PSU banks, and auto each down more than 2 per cent. India VIX, the volatility index, jumped over 7 per cent intraday. IndusInd Bank was the worst Nifty performer, plunging 19 per cent after its weak Q2 results. ITC gained over 2.2 per cent following an in-line quarterly performance.

“We expect consolidation to continue in the short term; a reversal in trend will depend on a slowdown in FPI selling and the outcome of the US presidential election,” said Vinod Nair, Head of Research, Geojit Financial Services.

Q2 results have been impacted by a tepid demand environment and margin pressure. A moderation in valuation, a pickup in earnings in H2FY25, and an expectation of an RBI rate cut in 2025 will provide support to the market, said Nair.