FPIs continue to remain sellers as Sensex, Nifty rally on RBI move

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Published: April 28, 2020 5:15:21 AM

The F&O segment recorded a turnover of Rs 7.15 lakh crore against the six-month average of Rs 14.42 lakh crore. The cash market turnover stood at Rs 45,740.8 crore against the six-month average of Rs 39,134 crore.

Continued selling in emerging markets is because investors want to pile up on cash due to the on-going pandemic.

Foreign portfolio investors (FPIs) continued to remain sellers in the Indian equity markets even as the benchmarks rose on Monday on the back of RBI’s nnouncement of a Rs 50,000-crore liquidity support for mutual funds and in anticipation of a fiscal package. The Sensex ended the day 415.86 points or 1.33% higher to close at 31,743.08. The Nifty50 closed 127.9 points or 1.40% higher to settle at 9,282.3.

According to provisional data, FPIs sold equities worth $120.3 million. Domestic institutional investors (DIIs) bought equities worth $150.02 million. They were large sellers in March, pulling out $8.3 billion. In April, FPIs have continued to sell but the extent of selling has reduced and the net outflow till April 27 is at $408.6 million. This, according to market experts, could suggest that FPIs still believe in India’s consumption story. G Chokkalingam, chief investment officer, Equinomics Research and Advisory, said, “During the 2008-2009 financial crisis, the Indian economy was open but FPIs pulled out $16 billion. The situation right now is worse and the only thing this suggests is that some FPIs still continue to believe in India’s consumption story.”

Other experts believe that the continued selling in emerging markets is because investors want to pile up on cash due to the on-going pandemic. The F&O segment recorded a turnover of Rs 7.15 lakh crore against the six-month average of Rs 14.42 lakh crore. The cash market turnover stood at Rs 45,740.8 crore against the six-month average of Rs 39,134 crore.

 

The market responded positively to the RBI’s liquidity measure. Markets held on to their gains after the RBI governor mentioned that another fiscal package was being worked on in a news report. The Nifty Bank rallied 2.5% during the day. The top gainers in Nifty Bank were RBL Bank, IndusInd Bank, Kotak Mahindra Bank, Axis Bank and Bandhan Bank up by 9.9%, 6.5%, 5.5%, 5.4% and 5.3%, respectively. Gopal Agrawal, head of macro strategy and senior fund manager, DSP Mutual Fund, said the liquidity measure was a step in the right direction. “Some measures to absorb some initial losses will boost confidence of banks to start lending more to stressed sectors of the economy,” he said. According to him, the lockdown could have an impact on the economy of close to 6% of GDP and support for half of it would be positive for the Indian economy.

Strong cues from Asia came after the Bank of Japan announced that it would extend its asset purchase programme. Japan’s Nikkei 225 ended the day 2.7% higher after the announcement. Bourses in China, South Korea and Hong Kong were up by 0.2% to 1.8%. At the time of press European markets were trading well into the positive territory with stock exchanges in the United Kingdom, France and Germany up between 1.6% and 2.5%.

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