Foreign Portfolio Investors (FPIs) shifted to net selling in the Indian stock market, liquidating equities worth Rs 12,404.73 crore during the week of August 5 to August 9, 2024. According to data from the National Securities Depository (NSDL), FPIs sold shares daily throughout the week, with the exception of Friday, when they purchased equities worth Rs 521 crore.

The selling by FPIs is attributed to global market uncertainties, particularly the unwinding of Yen carry trades. This shift was triggered by the Bank of Japan’s recent interest rate hike, which led to the Yen’s appreciation and intensified concerns about global recessionary pressures due to weak macroeconomic data from the U.S.

Vinod Nair, Head of Research at Geojit Financial Services, noted that while FPIs have been net sellers in India over the past month, strong buying activity from Domestic Institutional Investors (DIIs) and retail participants has mitigated the impact of foreign outflows. Although the carry trade situation appears to be stabilizing, future gradual increases in Japanese interest rates may still influence market dynamics.

Asian markets, including India, experienced selling pressure following the Bank of Japan’s rate hike announcement, which led to a broader unwinding of Yen carry trades. Despite the initial market turmoil, the situation improved when the Bank of Japan decided not to raise rates further and intervened to stabilize the market.

In contrast to the outflows by foreign investors, domestic institutional investors have been active buyers. Data from the NSE reveals that DIIs have made net purchases totaling Rs 23,500.01 crore in August, counterbalancing the foreign selling pressure.

In terms of broader investment trends, FPIs had been net buyers in the Indian stock market in previous months, with net investments of Rs 32,365 crore in July and Rs 26,565 crore in June, according to NSDL data.