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FIIs turn net buyers first time since Feb 24, but March equity outflow tops $7.7bn

FIIs had sold Rs 20,909 crore worth of shares in the previous week (March 16-20).

March 29, 2020 / 08:32 AM IST
A man reacts as he looks at a screen displaying the Sensex results outside the Bombay Stock Exchange building, Mumbai, March 12. REUTERS

A man reacts as he looks at a screen displaying the Sensex results outside the Bombay Stock Exchange building, Mumbai, March 12. REUTERS

The daily outflow by foreign institutional investors (FIIs) slowed down considerably in the week that ended on March 27. However, the rise in novel coronavirus cases is keeping investors and the market on tenterhooks.

In fact, FIIs turned net buyers on March 27 for the first time in the last 24 consecutive sessions. The net buying was Rs 355.78 crore against consistent sell-off in the previous 23 straight sessions.

However, they remained net sellers for the week to the tune of Rs 7,165 crore. The amount of selling on weekly basis was far less in the week that ended on March 27, compared to the hefty selling seen in past four consecutive weeks.

FIIs sold Rs 20,909 crore worth of shares in previous week (March 16-20), Rs 19,614 crore (March 9-13), Rs 10,720.5 crore (March 2-6) and Rs 11,368.67 crore (February 24-28).

"FPIs may halt their sales when they feel that either the negative effects of COVID-19 on Indian equities has ended or the valuations have reached such levels that they adequately reflect no earnings growth for 3-4 quarters. Also risk-on sentiments will revive globally together and Indian equities may have to wait for that to happen," Deepak Jasani, Head Retail Research at HDFC Securities told Moneycontrol.

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According to him, FPIs may start relooking at countries which introduce credible stimulus programs that are likely to result in growth momentum reviving soon.

Investors generally and FPIs in particular, expect rapid intervention from central banks and governments, which includes interest rate cuts, asset purchasing programmes, emergency lending facilities and fiscal stimulus to overcome the pandemic’s financial and economic toll, he said.

For the March, they offloaded Rs 58,408.15 crore ($7.7 billion at the rupee rate of 76 a dollar) worth of shares, the biggest ever monthly outflow, while their selling since February 24 was totalled to Rs 69,777 crore ($9.2 billion).

Equity funds globally shed $20 billion in the second week of March, the second-highest sum this year, on top of the record outflow of $23 billion in the first week of March. They were also aggressive sellers of emerging market debt.

On the contrary, domestic institutional investors continued to support the market as they were net buyers in March to the tune of Rs 48,468.62 crore worth of shares on top of Rs 16,933 crore buying in previous month.

The market did touch the lowest closing level (since April 2016) on March 23. But, there was a buying thereafter which helped benchmark indices cut weekly losses to large extent.

The BSE Sensex shed 0.34 percent and the Nifty50 declined nearly a percent as investors continued to monitor updates about the novel coronavirus pandemic that has rattled global markets and economies.

Globally, equity markets corrected in the range of 20-30 percent in more than a month. The number of COVID-19 cases has crossed 6.6 lakh globally, and the death toll has jumped to 30,800.
Sunil Shankar Matkar
first published: Mar 29, 2020 08:32 am

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