TRADING PLACES

AS FPIS TURN CAUTIOUS ABOUT THE INDIAN MARKET, RETAIL INVESTORS ARE STEPPING IN. WHAT'S THE ROAD AHEAD LIKE?

- B.S. SRINIVASALU REDDY

Foreign portfolio investors (FPIs) dominated the stock market in 2020/21, saving the day for equities even in the face of the deadly pandemic. However, they have turned cautious post Covid 2.0. In April alone, FPIs exited positions worth over ₹9,600 crore, snapping their net buying spree for six months in a row during which they had pumped in close to ₹2 lakh crore.

FPIs invested a total of ₹2,74,034 crore in equities in FY21, while domestic institutions, particularly mutual funds, sold a net ₹1,20,732 crore. FPIs have made India the top investment destination among emerging markets. Even high networth individuals (HNIs) and the new breed retail investors have proved to be very smart buyers in FY21.

Risky Bet?

The second wave of Covid-19 has increased the risk perception in the equity market compared to last year. “There is a reversal of India’s perception in the international media, from a country that managed Covid-19 very well and supplier of vaccines to the world, to a country that has failed to provide essential health support to its citizens,” says Srinivas Rao Ravuri, Chief Investment Officer, Equities, PGIM India Mutual Fund.

Acute pressure on the health system has led to over a dozen state governments imposing restrictions on non-essential activities to break the chain of the virus, hampering production, and thereby leading to job and income losses for individuals and output and revenue losses for companies. Reflecting the trend, the Index of Industrial Production slumped 3.6 per cent year-on-year in February.