FPIs raise tempo in primary market despite sustained selling in the secondary market

Indian primary equity market continued to attract funds from foreign portfolio investors (FPIs) in October notwithstanding their exodus from the secondary market according to the data from NSDL. FPIs parked net $ 2,361 million (Rs 19841.9 crore) in the primary market, the highest monthly investment since November 2021 when they had invested $ 3,745 million through this route, which consists of participation in initial public offerings (IPOs) and qualified institutional buying (QIB). FPIs invested net $ 10,275.5 million in the first 10 months of 2024 in the primary market.

In the secondary market, they sold equities worth $ 13,556.9 million (Rs 1.1 lakh crore) in October, the highest ever monthly outflow, surpassing the $ 8,126.8 million worth of selling in March 2020. Rising attractiveness of Chinese equities amid economic impetus by the local government has lured FPIs away from Indian equities.

With the mega selloff in October, FPis have sold equities worth $ 9,416.7 million net in the secondary market in 2024 so far. As a result, the net inflow of FPIs in primary and secondary market together for 2024 so far has reduced to $ 858.9 million compared with $ 12,054 million at the end of the previous month.

Despite such a concentrated selling by FPIs in the secondary market, the fall in the benchmark indices was limited to around 6% in October, helped by a sharp improvement in investment by domestic institutions. According to the data from SEBI, domestic mutual funds invested a record net Rs 87,228 crore (over $ 10.3 billion) in October till 29th. Local funds have invested Rs 3.7 lakh crore so far in 2024 on net basis, far outpacing the investment of Rs 1.7 lakh crore in the whole of the previous year. This was also higher than the previous record of nearly Rs 2 lakh crore investment in 2022.