FPI sells close to Rs 6,000 crore stocks ahead of Budget 2021
Benchmark equity indices extended their losses for the sixth session on January 29 as the pre-Budget Economic Survey failed to cheer market participants
Foreign portfolio investors (FPI) offloaded shares worth of Rs 5,930.66 crore on Friday ahead of the Union Budget 2021 on February 1, as per data available with stock exchanges.
Benchmark equity indices BSE Sensex and NSE Nifty extended their losses for the sixth session on January 29 as the pre-Budget Economic Survey failed to cheer market participants.
As a result, the 30-share index Sensex closed 588.59 points, or 1.26%, down at 46,285. On the other hand, the 50-share Nifty index settled 182.95 points, or 1.32%, lower at 13634.60.
Commenting on the selloff, Vinod Nair, Head of Research, Geojit Financial Services said, “The market traded negative, during the week, due to continuous FII selling under a weakening global trend. Both FIIs and domestic investors sold ahead of the key union budget. Global sentiment turned fragile as further lockdown delayed economy recovery and speculative activities in the US market.”
Union budget will be the key to add strength in the domestic market to perform better compared to the rest of the world. “The risk is that expectations are high that the government will find a balance between populism, reform and growth under a weak fiscal position,” Nair added.
Earlier on Friday, the Economic Survey 2021 noted the country’s real GDP growth is likely to expand by 11% in FY22. On the other hand, it estimated that the economy is likely to contract by 7.7% in FY21 on account of a sharp 15.7% dip in the first half and a modest 0.1% fall in the second half.
Rajesh Agarwal, Head Research, AUM Capital said, “The market has run up quite a lot in the last ten months due to heavy buying by FIIs. So one there was profit booking from FII side. We have a major event, that’s budget on Monday, and a lot of short term traders decided to keep their positions low or book profits before the event. Some hedge funds have been also selling in the Indian markets.”
However, he added that any fall is a good opportunity to lap up quality stocks. “There might be some amount of volatility on the budget day and the day following, but I think after that things would be normal,” Agarwal added.