Foreign portfolio investors (FPIs) have sold equity shares worth over $3 billion in the past two months, post the Presidential elections in the US and the central government’s decision to demonetise R500 and R1,000 currency notes.
Moreover, the hike in US Fed rates on December 14, 2016, and expectation of rate hikes of a total of 75 basis points in 2017, has led to a rally in US dollar and some profit taking in equities. FPIs been net sellers in all the 29 sessions since November 9, except for three sessions.
Foreign Portfolio investors have sold stocks worth $3.7 billion from the beginning of October 2016 till date. This is the worst selling by FPIs in the previous eleven quarters.
Even though overseas investors were net sellers in past three months and first two months of the calendar year 2016, they were net buyers worth of $3.7 in CY 2016.
However, markets such as Taiwan and South Korea have attracted more foreign flows than India this year. Taiwan attracted the highest inflows of $13.13 billion followed by South Korea which pulled in $ 10.25 billion. Indonesia, however, hasn’t been a big destination with inflows of $1.19 billion moving into its equity markets in the year so far.
Consensus estimates peg the one-year forward trading multiple for the benchmark Sensex at 15.1 times, somewhat more expensive than Taiwan’s at 13.8 times. Korea is far cheaper, trading at 10.25 times, one-year forward estimated earnings.
Analysts said markets will continue to remain volatile in the coming months as earnings recovery of companies has been pushed further by couple of quarters due to demonetisation.