Foreign Portfolio Investors (FPIs), who started the year with strong buying interest in Indian equities, continued to be net sellers in the Indian equity cash market this week, offloading equities to the tune of ₹12,200 crore (about $1.5 billion) over the last three trading sessions (truncated week). 

This came on top of the net equity sales worth ₹24,715 crore in the four trading sessions from January 17 in the previous week, data with depositories showed.

FPIs have only been net sellers in each of the seven trading sessions since January 17, resorting to aggregate net selling of Indian equities worth ₹36,915 crore. 

So far this month, FPIs have been net sellers to the tune of ₹27,664 crore. This is in sharp contrast to the trend in December 2023 which saw a record FPI inflow of ₹66,134 crore.

The FPI selling spree this month was largely prompted by the hardening of US bond yields, which fell from about 5 per cent in November 2023 to 3.8 per cent post the US Fed pivot in its December 2023 meeting and is now back to 4.18 per cent levels, say analysts and market observers. 

The benchmark US 10-year Treasury yield dropped 46 basis points in December 2023 after falling 53 bps in November. 

The US Fed triggered fresh market euphoria when it said rate hikes were over in its December 2023 meeting.

The not-so-exciting Q3 results in large Indian financial services also prompted large profit booking in Indian equities by FPIs this month, analysts said. 

“Rise in bond yields, tighter FPI norms and not-so-exciting earnings season so far has resulted in some profit booking by the FPIs,” said Jitendra Gohil, Chief Investment Strategist, Kotak Alternate Asset Managers while commenting on the FPI selling spree in Indian equities in recent weeks.

V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said “FPIs continued to be sellers in the cash market having sold equities worth ₹27,664 crore through January 25. The rising bond yields in US is a matter of concern and this has triggered the recent bout of selling in the cash market. The rally in global stock markets was triggered by the Fed pivot which saw the 10-year bond yield falling from 5 per cent to around 3.8 per cent. Now the 10-year is back at 4.18 per cent which indicates that the Fed rate cut will come only in H2 of 2024”.

He added that FPIs were net sellers in autos and auto ancillary, media and entertainment, and marginally in IT. They bought in oil and gas, power and selectively in financial services, Vijayakumar added.

Both the benchmark indices Sensex and Nifty fell 1 per cent each this week (three trading sessions). The Nifty Bank index fell for the fourth consecutive week. 

Although FPIs have been net sellers in Indian equities, they continued to pour money into the Indian debt markets. FPI inflow into Indian debt markets so far in January 2025 stood at ₹17,120 crore ($2.06 billion), data with depositories showed.