FPI buying nosedives 94% week-on-week; are dollars taking a “U” turn on Dalal Street?

FPIs net invested a mere Rs 468 crore in domestic markets during the week ended July 28, compared to Rs 7,804 crore in the preceding week.

Benchmarks Sensex and Nifty 50 registered their first weekly loss after four consecutive gains, as investors booked partial profits.

But on a monthly basis, inflows from FPIs were positive for the fourth consecutive month in July. They net invested over $4 billion in July, but this was lower than the over $6 billion inflows in June.

Since March this year, FPIs have net invested nearly $19 billion in Indian equities, which is more than the $18 billion of outflows witnessed in the whole of 2022.

Trend Reversal?
After a relentless run for four months, data indicators do suggest that the big bulls may feel fatigue and this could result in rangebound trade in the near term.

In the last 33 years, there have been 23 occasions, excluding the current set of 5 months, where the index has seen 5 straight months of gains, Sriram Velayudhan of IIFL Securities pointed out. “Interestingly, the probability of successive months with positive returns gradually reduces as we enter the 6/7/8 months set. In short, based on empirical evidence, we may be now venturing into a territory where momentum is likely to take a breather,” he said.

The trading strategy of FPIs hinges a lot on the movement of the dollar index. In July, the index fell over 1%, and the movement in the coming sessions will be closely tracked.

FPIs have been net investors in automobiles, financials, capital goods, real estate and FMCG stocks in the past 2-3 months, and one needs to see if this trend continues.

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