Largecaps face brunt of FII selling, markets, investors to remain vigilant

FPJ News Service MUMBAI

Since largecaps dominate the assets under custody of FIIs, largecaps have been facing the brunt of FII selling, said senior investment strategist on Sunday. “Predominantly, investors in general, will remain vigilant this week.

“Relentless selling in largecaps has made their valuations attractive, opening up opportunities for long-term investors. Reversal of FII strategy will happen when the dollar index moves down. This will happen but we can’t predict when," said Dr. V K Vijayakumar, chief investment strategist at Geojit Financial Services.

Despite many positive developments like a good Budget, rate cut by the RBI and slight improvement in Q3 results, the FIIs continued to press sales. The total FII selling this month through 14th February stood at Rs 23,242 crore in the cash market, he said.

“Recent shifts in global policies, especially those emerging from the US are invoking a sense of uncertainty among FIIs. The allure of US assets has intensified, driven by rising bond yields that have made these investments seem more secure. This has led many FIIs to pivot away from Indian and other emerging market stocks. Investors are increasingly drawn to the promise of safer returns offered by US equities, leaving many markets, including India, in their shadow.

 “Compounding this trend is a noticeable slowdown in corporate sales growth within India, further fueling the exodus of capital from Indian equities. With prices soaring, many are reassessing their positions, reluctant to dive into a market that appears overheated and potentially risky. This combination of factors creates a complex landscape where the once-vibrant interest in Indian equities is now laced with hesitation and caution," said Vipul Bhowar, senior director, listed investments at Waterfield Advisors.