Banks contagion fears make FPIs net sellers this week, inflow trims to ₹11,495 cr in equities

More sustained USD losses, Scotiabank

The initial block sale with Adani Group that attracted foreign portfolio investors (FPIs) to the Indian market has been countered by concerns about contagion among international banks. Global investors’ spirits were low as a result of the failure of Silicon Valley Bank and Signature Bank as well as a liquidity crisis affecting other US and European lenders. Indian stock markets took the most hit. The Sensex and Nifty 50 fell by around 2% in the week of March 13–17. And as a result of this week’s selloffs, FPI inflows have decreased.

According to NSDL data, as of March 18, FPI inflow into Indian equities for the current month was $11.495 billion.

According to NSDL data, the inflow of FPIs during the previous week that ended on March 10 was $13,540 crore. The massive block deal of Rs. 15,446 crore in four Adani companies was to blame for this.

That stated, during the trading sessions from March 13 to 17, FPI inflow decreased by 2,045 crore.

Domestic equities began the week that ended on March 17 down due to banks’ fears of contagion following the failure of Silicon Valley Bank and Signature Bank, but they recovered in the final two trading sessions as lenders like Credit Suisse and First Republic Bank received some liquidity lifelines, which calmed the panic selling. Also, numbers on inflation that were better than expected helped to improve the mood. Gains were however limited by a steady outflow of foreign currency.

As a result, the Sensex fell by 1,145.23 points (1.93%) this week, and the Nifty 50 fell by 312.85 points (1.8%).

Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, commented on the performance of FPIs as follows: “FPIs have invested a total amount of ₹11344 crores till 18th March. This includes GQG’s substantial 15446 crore investment in Adani shares. Hence the FPI is negative after removing the bulk agreements.”

Foreign institutional investors (FPIs) sold more than they bought over the most recent week. They made 7,953.68 crore in sales between March 13 and 17.

Vijayakumar emphasised that FPIs have already sold shares for 23283 crores for the year 2023. (NSDL). FPIs have consistently solely purchased capital items. Buying and selling have alternated in the financial services industry on various fortnights.

“FPIs are unlikely to turn purchasers in the near term,” he continued, “because risk-off is the dominating market sentiment presently in light of the bank collapses in the US and fears of contagion.”

FPI investment in Indian equities has totaled $22,651 crore so far this year.

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