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The quit India movement of foreign portfolio investors has been gathering pace and they had been net sellers in the secondary market for 26 continuous days, halting on Christmas eve when FPIs turned net buyers by ₹255 crore.
FPIs sold shares worth ₹55,748.16 crore in the cash segment of the secondary market between November 16 and December 28. For whole of November, they sold shares worth ₹33,799.66 crore.
Despite the heavy selling by FPIs, the benchmark Sensex has fallen just four per cent in the Novermber 16-December 28 period thanks to buying by retail investors, mutual funds and domestic institutional investors (DIIs).
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said the FPI exit is not impacting the market as it used to be in the past as DIIs and retail buyers are absorbing all their selling. While rich valuations remain a serious concern, bulls are climbing the walls of worries such as the surge in Omicron infections globally and central banks turning hawkish, he said.
Foreign investors have turned risk averse due to monetary tightening and the unpredictable Omicron impact. Also, major central banks are expected to raise their benchmarks sooner than later and roll back the fiscal stimulus on inflation concerns.
SIPs support
S Ranganathan, Head of Research, LKP Securities, said domestic investors and mutual funds have been steady buyers whenever there is a sharp fall with the monthly SIP run-rate at an all-time high of ₹11,000 crore.
However, Ankit Pareek, Research Analyst, Choice Broking, said the scope for a big rally hereon is a bit low as the valuation of the Indian market is at a premium to other emerging markets. Moreover, he said, future earnings of companies have already been priced in the market valuation though margins would be a key factor to monitor.
Mohit Nigam, Head (PMS) Hem Securities, said the operating costs of corporates may ease as crude oil and other commodities have become cheaper.
The Indian economy is also on a strong footing with robust GDP growth, high GST collections, sharp expansion in PMI Manufacturing and expectation of good third quarter earnings by corporates. Also, he said, investors are using global factor-induced dips to invest in quality scrips.
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