Heavy selling by FPIs not an exodus, yet hurting

The noise around heavy selling by foreign investors in India masks a key caveat: there are no signs of a large-scale exodus.

- Ram Sahgal

MUMBAI: Yet, foreign portfolio investors or FPIs are also willing to exit at lower levels, which is amplifying the bearish sentiment.

FPIs have net sold shares worth $21 billion over four months through January end, per data from National Securities Depository Ltd (NSDL). That's about 2.7% of their total equity holdings worth $782 billion as of January.

This actual selling accounts for just 14.2% of the $148 billion decline in their assets from a cumulative $930 billion as of September end. The rest is attributable to unrealized losses to their portfolios.

"The figure of actual selling as a proportion of total assets might be insignificant, but what's causing the turbulence is willingness to continue selling at lower levels despite being underweight on India," said Nilesh Shah, managing director at Kotak Mahindra Asset Management Company.