Foreign portfolio investors sell shares worth over Rs 22,000 crore in May! What should your strategy be?

| TOI Business Desk | TIMESOFINDIA.COM | May 14, 2024, 13:57 IST

Foreign portfolio investors (FPIs) selling Indian stocks worth Rs... Read More

The Indian stock market has been experiencing significant pressure, particularly in shares of companies with higher foreign ownership, as overseas investors have been selling off their holdings. In May alone, foreign portfolio investors (FPIs) have sold shares worth over Rs 22,000 crore, following a pullout of Rs 21,524 crore in April. Consequently, more than 100 stocks with over 5% FPI stake as of March 31, 2024, have seen declines ranging from 10% to 30%, compared to a mere 1.7% fall in the Nifty index.

G Chokkalingam, founder of Equinomics Research, told ET, "In the present circumstances, FPIs are adopting a risk-off strategy, foreseeing significant volatility leading up to the general election." He has advised investors to limit their exposure to FPI-heavy stocks until the elections conclude.

Several FPI-heavy stocks, such as Aster DM Health, Sonata Software, Paisalo Digital, Gujarat State Petronet, Coforge, and Birlasoft, have experienced drops between 20% and 30% in the past month.

FII Holding

While FPI selling may have contributed to this decline, analysts suggest that weaker-than-expected results in some of these companies have led to broad-based selling across various investor categories.

Large-cap stocks with higher-than-average FPI holdings, including Larsen & Toubro, HCL Technologies, Kotak Mahindra Bank, Titan, and DLF, have also fallen by more than 10%, with HDFC Bank, Infosys, and Bajaj Finance declining over 5% in just one month.

Also Read | Seven out of India's top 10 wealthiest individual investors lost money in March quarter - check details

Joseph Thomas, head of research at Emkay Wealth Management, says, "FPI-heavy larger stocks have not given any returns to investors in the last two to three years." He suggests that investors may consider staying invested in these stocks due to the lack of significant movements or explore mid-caps for better price performance.

The current selling trend by foreign investors marks a deviation from the patterns observed in the previous two general elections. In 2019, FPIs purchased shares worth nearly Rs 25,000 crore in the two months leading up to the election results, while in 2014, they acquired shares worth Rs 36,500 crore in the two months preceding the elections.

Some FPIs are reallocating their investments from Indian stocks to China and Hong Kong, which are currently trading at more attractive valuations compared to most global markets. VK Vijayakumar, chief investment strategist at Geojit Financial Services, has attributed the aggressive selling by FPIs to the outperformance of China and Hong Kong during the last month and the underperformance of India.

The Hang Seng Index in Hong Kong has surged by over 16% in one month and 18% in two months, while China's Shanghai Composite has gained 4% and 15% in the last one and two months, respectively.

Top 10 Countries With Highest Gold Reserves

Top 10 countries by gold reserves: India and China central banks have been stocking up on gold for the last few quarters. In fact, RBI’s net purchases for 2024 have already surpassed the number for the entire of 2023! Central banks of both India and China bought 5 tonnes of gold in March 2024. The aggressive gold buying by central banks has been driving up gold prices to record highs. The Central Bank of Turkey has emerged as the largest buyer of gold in March at 14 tonnes! So, which are the top 10 countries with the highest gold reserves? Let’s take a look:

USA or the United States of America holds the world’s largest gold reserves at a whopping 8133.46 tonnes as of end March 2024. However, there has been no net change in America’s gold reserves in the last three quarters according to data compiled by the World Gold Council. (AI image)

Germany holds the world’s second largest gold reserves at 3352.31 tonnes at the end of March 2024. This is significantly lower than the gold reserves with America. Germany’s gold reserves declined marginally from 3352.65 tonnes in the last quarter of 2023, as per World Gold Council Data. (AI image)

Italy has the record for holding the world’s third highest gold reserves. At the end of the first quarter of 2024, Italy had 2451.84 tonnes of gold reserves. The country’s gold reserves have remained unchanged over the last three quarters, as per World Gold Council data. (AI image)

France has the fourth largest gold reserves in the world as of end March 2024, as per World Gold Council data. The country’s gold reserves have largely unchanged in the last three quarters. (AI image)

Russia ranks fifth in the list of the top 10 countries with the highest gold reserves. Its gold reserves stood at 2332.74 tonnes at the end of March 2024, says World Gold Council data. (AI image)

China has been in the news for its central bank buying gold like never before. The People’s Bank of China added 5 tonnes of gold in March 2024 alone. At the end of the first quarter of this calendar year, China’s gold reserves stood at 2262.45 tonnes, a rise of 27.06 tonnes from the last quarter of 2023. (AI image)

Switzerland has gold reserves of 1040 tonnes at the end March 2024, as per World Gold Council data. At the 7th spot in the list, Switzerland’s gold reserves have remained unchanged in the last three quarters. (AI image)

Japan holds the 8th rank in the list of the top 10 countries with the largest gold reserves. Its gold reserves were at 845.97 tonnes at the end of March 2024. (AI image)

The Reserve Bank of India or RBI has been purchasing gold aggressively for some time now. At the end of March 2024, India’s gold reserves with the central bank stood at 822.09 tonnes. This is an increase of 18.51 tonnes compared to the last quarter of 2023. (AI image)

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Top Comment

s_behari

184 days ago

The foreign investors seem to have realised that the BJP is not going to do so.well and have started selling their holdings .Hope this is proved wrong because the stock market is jittery and needs to calm down .!

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Foreign portfolio investors sell shares worth over Rs 22,000 crore in May! What should your strategy be?

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