WHY ARE FIIs SELLING INDIA
T.me/AlliesFin
*QUICK TAKE*: I think FIIs are not selling India because they have a worry on India. Yes, definitely there is a bit of profit booking going on, but more importantly they are selling India because they are selling EM equities in general. We are seeing that India dedicated foreign funds are continuing to get inflows and FIIs are buying primary equities while selling in secondary markets!
1) FIIs are putting in money in primary markets but pulling out of secondary markets: In FY25 TD FIIs have put in $1.7bn in primary markets and taken out $3.6bn from secondary markets. If they were turning -ve on India they would also reduce the participation in primary markets in my view. In this case the secondary market selling is primarily funding the primary market deployment.
2) FIIs are selling EM equities in general, not only India:– FIIs have been sellers in several EM markets, not only India. EM ex-China outflow is ~$8bn in the month of April vs India seeing $1.3bn outflows.
3) FII EM selling more on account of US yields going up: If you look at FII flows into EM equities it is quite linked to what the view on US rates is and understandably so! When yields in US tighten, there is less reason to hunt for better returns in EM markets and we see FII inflow in EM equities come off.
4) *Are FIIs selling India to buy China?* China is seeing buying from FIIs as you can see in the above chart and India is seeing selling. However, I would not say that FIIs are selling India to buy China! Reason for it is that India dedicated FII ETF funds are still seeing inflows (next point). China, Korea and Turkey are the only relatively large EM markets FIIs are buying…they are selling every other EM market. So, I would not take the selling by FIIs in India as an indication of FIIs taking a specific India call…I would take it as an EM issue and India is part of it!
5) *ETF data also indicates no India dedicated selling*: I usually track the foreign ETF data to figure out flow trends because with ETFs you can see daily inflows/outflows. This data shows that India dedicated foreign ETFs like iShares India ETF continue to see inflows! However, EM ETFs are seeing outflows.
By: via AlliesFinServe #StockMarket #Bharat Telegram.me/AlliesFin
