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FIIs trim exposure in April even as mutual funds buy big

January saw strong inflows followed by near equal quantum of outflows in February.

, ET Bureau|
Updated: Apr 23, 2018, 11.30 AM IST
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Between January and April last year, FPIs and mutual funds had pumped in Rs 42,000 crore and Rs 20,700 crore respectively into Indian equities.
Mumbai: Foreign investors have sold the April rally in the domestic stock markets, offloading shares to the tune of Rs 4,200 crore till Friday.

Mutual fund flows have held fort again, with data available till April 16, showing buying of shares worth Rs 4,600 crore by funds.

Experts said growing macro worries and oil prices surging above $70 per barrel have caused foreign investors to trim exposure to India, and the trend is likely to continue as none of the macro worries seem to abate.

Mutual fund inflows in this scenario will be closely watched out after they showed signs of slowdown in March. CLSA recently said continued April and May data would provide a clearer picture on the domestic flows front after flows into mutual funds fell to a 13-month low in March.

FPI flows have been topsy-turvy this year. January saw strong inflows followed by near equal quantum of outflows in February. March again saw strong inflows. The faltering of interest is visible on both sides as the quantum of buying has reduced from FPIs as well as mutual funds.

Between January and April last year, FPIs and mutual funds had pumped in Rs 42,000 crore and Rs 20,700 crore respectively into Indian equities. So far this year, FPIs and mutual funds have pumped in closed to Rs 9,700 crore and Rs 37,300 crore, respectively.

FII SNIP

“Foreign flows have slowed down again as interest level in India has come down because of uncertainty around the macro with bond yields rising, oil going up, rupee depreciating and valuations being on the higher side as far as good quality companies are concerned. Flows into mutual funds also seem to be slowing in April given the macro uncertainties,” said Sanjeev Prasad, co-head, Kotak Institutional Equities.

Sensex and Nifty have gained 4.4 per cent so far in April, with the surge in information technology stocks playing a big role in the upmove, even as oil prices edged higher.

“There is disconnect between the bond market and the equity market. We saw that in February as well, at which time the market had corrected sharply. We may be headed towards a similar situation. One can forget about foreign flows for some time,” said Prasad.

Earnings season would be critical for flows. “If earnings season pans out well, foreign flows can turn positive again,” said Abhay Laijawala, head of research, Deutsche Equities India.

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