Foreign investors snap month-long selling streak, turn positive in Indian equities

Foreign investors pumped in nearly Rs 809 crore in the equity cash market on Tuesday, which is the first time FII flows have been positive in just over a month. StockEdge data shows that FIIs have been net buyers last on January 2.

Indian markets have been facing brutal wrath of foreign investors, as they sold over Rs 2 lakh crore in the last four months. In January alone, foreign outflows amounted to Rs 76,551 crore.

In just four days of February, Indian equities have witnessed a net FII selloff worth Rs 5,529 crore.

India’s headline indices rallied over 1.6% on Tuesday, shrugging off the trade war fears that weighed on global stocks even as the US struck a temporary pause on tariffs with Mexico and Canada.

“The real trigger for Indian markets today was the tariff pause on Mexico and Canada, which signalled that the U.S. is ready to negotiate,” said G Chokkalingam, founder and head of research at Equinomics Research.

Compared to Mexico, Canada and China, India’s exports to the US are relatively smaller and hence investors are optimistic that they may not attract Trump’s scrutiny, Chokkalingam said.The Nifty started February on a weak note after a mixed federal budget and the trade war fears, threatening to extend a four-month losing streak. That, however, has made stock prices relatively cheaper.Heavyweight financials rose 2.11%, led by a 2.6% jump in top private lender HDFC Bank. The smallcaps and midcaps rose 1.1% and 1.6%, respectively.

State-owned firms rose 2.7% after dropping 6.3% in the previous two sessions, led by oil marketing companies on softer crude prices and defence firms on a potential jump in orders.

Analysts say India could outperform in a weak global market, and as a rebound has been triggered in the global sentiment and it has fuelled a sharp surge in domestic equities.

“While overall market sentiment remains positive, large-cap stocks are the preferred choice. Meanwhile, banking stocks are rallying in anticipation of a rate cut in this week’s RBI policy, new governor’s first meeting,” said Vinod Nair, Head of Research, Geojit Financial Services.

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