FPI trades hint at a change of mood with late March buys

Synopsis

Foreign portfolio investors (FPIs) remained net sellers of Indian equities in March for the third month but experienced a sharp deceleration in outflows thanks to strong buying in the second half of the month. Domestic funds showed a contrasting trend, selling more equities towards the end of the month while FPIs increased their buying.

ET Intelligence Group: Foreign portfolio investors (FPIs) remained net sellers of Indian equities in March for the third consecutive month but there was a sharp deceleration in the outflow due to strong buying in the second fortnight of the month. They invested net ₹26,042 crore ($3,037 million) in the second half of March, a sharp contrast to the outflow of ₹30,015 crore ($3,438 million) in the first fortnight. As a result, net outflow for the full month reduced to ₹3,973 crore ($401.2 million). The extent of investment by foreign investors in the coming months will depend upon several factors including the tariff stance by the Trump administration and its impact on global trade, attractiveness of the Indian economy relative to the US, which is facing recessionary pressure and the valuation comfort of the domestic equities.

In March, FPIs sold ₹6,027.8 crore ($637.3 million) of equities in the secondary market and made purchases worth ₹2,055.2 crore ($236.1 million) in the primary market. For FY25 (April-March), they were net sellers of equities worth ₹1,27,041 crore ($14,626 million) including primary and secondary markets. This was the second largest outflow following FY22 when they had sold equities worth ₹1,40,010 crore ($18,468 million).

ETMarkets.com

Compared with the FPIs, domestic funds showed a contrasting trend. Their net equity investment for the full month of March was ₹9,147.6 crore, lower than ₹13,516.6 crore that they had invested till March 7. This means the local funds offloaded equities in the remainder of the month even while their foreign counterparts increased buying during the period.

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