Heavy FPI selling weighs on markets

PALAK SHAH Mumbai | Updated on March 18, 2020 Published on March 18, 2020

Relentless selling by foreign institutional investors (FPIs) to the tune of ₹4,044 crore in the cash segment on Wednesday put more pressure on Sensex and Nifty, which crashed by another 5.6 per cent to touch new multi-year lows. Nifty index fell by 498 points to close at 8,468. Sensex was down 1,709 points at 28,869. In intra-day trade, the fall in two indices were steeper.

Total FPI selling figures just in the cash segment are now nearing $5 billion and the number is starker still in the derivatives segment. FPIs hold net short positions in the index futures segment of more than 1 lakh contracts. The selling is mainly a reflection of US index futures Dow Jones, Nasdaq and S&P hitting consecutive daily limit down circuits for the third day in a row this week.

Domestic institutional investors bought stocks worth ₹3,422 crore. These investors have made net purchases of nearly $3 billion in the cash segment but it is the heavy net short positions of FPIs that has been putting pressure on the markets, experts said.

Retail investors and high net worth individuals have sold stocks worth nearly ₹4,061 crore this year so far. The selling from propriety traders, the self-trading desks of financial services firms, has been to the tune of ₹2,520 crore, data showed.

US markets have given up over 30 per cent gains since the peak levels. There has been no respite from falling share prices even amidst talks of a trillion-dollar relief package from the US Federal Reserve. The Fed is already intervening heavily in the bond market and committed $700 billion worth of purchases.

In Europe, where Italy, France and Germany are under a lockdown, the share markets were trading down by more than 5 per cent.

Published on March 18, 2020
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