FPIs offloaded Indian equities for a second consecutive month in February. File
| Photo Credit: Reuters
Foreign portfolio investors (FPIs) continued their selling streak in February, but selling moderated in the month after hitting a seven-month high in January, data from National Securities Depository Ltd. showed.
FPIs offloaded Indian equities for a second consecutive month in February, selling shares worth ₹52.94 billion. The magnitude of the selling, however, moderated compared with January’s sale of ₹288.52 billion worth of stocks.
The reallocation of funds to China and Taiwan and the uncertainties from a sharp sell-off in Adani Group shares had intensified FPI selling in January.
Foreign investors trimmed their investments from emerging markets such as India to raise exposure to China due to attractive valuations, said independent market expert Mehraboon Irani.
The Nifty 50’s price to earnings (P/E) ratio stood at 26.31 as of March 6, compared with FTSE China A50’s 13.95 and 11.30 for Hong Kong’s Hang Seng index.
A lower relative P/E ratio indicates attractive valuations while a higher P/E implies expensive valuations.
With domestic earnings also likely to remain muted for the next few quarters due to high-interest rates, foreign investors may take a while to buy Indian equities as they expect valuations to fall further, Mr. Irani added.
FPIs sold nearly ₹50 billion worth of shares in the oil and gas sector in February besides turning net sellers in power and metals. Capital goods, information technology and services stocks saw renewed buying interest from FPIs.
India’s benchmark Nifty 50 fell 2% in February on sustained foreign selling, extending losses for a third month in a row.
On five similar occasions in the past, the Nifty has rebounded after three successive months of losses. But analysts warned it could be different this time around due to a prolonged high interest rate trajectory.
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