What are FPIs & domestic investors thinking about the market?

Indian equity markets have been at the mercy of foreign portfolio investors for over six months now.

Since October 2021, FPIs have sold equities worth nearly 1.58 trillion rupees as rising crude oil prices and steep valuation of the markets made them nervous. Of this, peak selling was witnessed in March 2022, when FPIs sold equities worth 41,123 crore rupees.

According to analysts at Jefferies India’s positioning has come down to neutral or slight overweight level over the last 3-6 months, implying 50-100 bps weight reduction.
While valuations have come off from peak, they still remain the key discomfort.

VK Vijayakumar of Geojit Financial Services, says that along with relative rich valuations, FPIs think markets have not priced in Fed’s monetary tightening.
 
That said, a recent trend has emerged in the markets, which is slowdown in the buying momentum of domestic institutional and retail investors.

Data compiled by BS Research Bureau shows that DIIs bought equities worth 4,471 crore rupees in October last year. This buying increased to little over 42,000 crore rupees in February this year.
However, so far in April, DIIs have bought equities worth 11,000 crore rupees only.

So, is this a worrying sign for the markets?

From investment viewpoint, analysts at HSBC remain bullish on defensiveness, recovery plays with strong earnings outlook, and industrials.
Individually, they like ICICI Bank, Infosys, Bajaj Auto, Maruti, L&T, HUL, Apollo Hospitals and Sun Pharma.

On Thursday, the BSE Sensex index ended at 57,912, up 874 points, while the Nifty50 closed at 17,393, up 256 points.

On Friday, markets will react to HCL Tech’s Q4 numbers and await March quarter earnings of Hindustan Zinc, Tata Metaliks and 12 other companies.
Globally, developments around Ukraine-Russia war and rising Covid-19 cases will guide the sentiment.