 |
|
The Indian equity market witnessed a seemingly positive development on February 18th, with foreign institutional investors (FIIs) appearing to turn net buyers after nine consecutive sessions of selling. Preliminary data from the National Stock Exchange (NSE) indicated FII net purchases of ₹4,756.56 crore and domestic institutional investor (DII) net purchases of ₹3,072.19 crore. However, a closer examination reveals a more nuanced reality, significantly impacted by a substantial block deal involving Bharti Airtel. This deal, where 5.11 crore shares changed hands at an average price of ₹1,660 per share, totaling ₹8,485.11 crore, significantly distorted the initial impression of FII activity. The apparent positive trend masked an underlying negative trend, highlighting the importance of scrutinizing market data beyond superficial indicators.
A breakdown of the Bharti Airtel block deal reveals that FIIs acquired ₹5,130.73 crore worth of shares, while DIIs purchased ₹1,204.36 crore. Bharti Airtel itself acquired the remaining ₹2,000 crore. When this significant block deal is removed from the equation – effectively adjusting the net FII and DII positions – the true picture emerges. After adjusting for the block deal, FIIs actually registered net sales of ₹344.17 crore, marking their tenth consecutive session of net selling. This contradicts the initial, misleading impression of a FII market return. In contrast, DIIs maintained their buying spree, with an adjusted net buy of ₹1,868.83 crore, demonstrating continued confidence in the domestic market despite the overall FII outflow.
The participation of prominent FIIs in the Bharti Airtel block deal, including Goldman Sachs Trust II, GQG Partners, Vanguard, Reliance Trust Group, Fidelity, India Acorn Fund Ltd, and Nordea, underscores the scale and significance of this transaction. Similarly, notable DIIs such as SBI Life Insurance Company, the National Pension System (NPS) Trust, and ICICI Prudential Mutual Fund participated as buyers. This reveals significant capital movement within the market, which is easily misinterpreted when considering only headline numbers. The magnitude of the block deal significantly overshadows the underlying trend of sustained FII selling, a critical factor often overlooked in initial market reports.
The continued net selling by FIIs for ten consecutive sessions, totaling ₹28,645.03 crore, points to a persistent negative sentiment among foreign investors. This sustained outflow contrasts sharply with the persistent net buying by DIIs, amounting to ₹27,676.93 crore over the same period. The divergence between FII and DII behavior suggests a difference in perception regarding the Indian market’s short-term prospects and future valuations. While domestic investors appear confident, foreign investors remain cautious, possibly influenced by global economic uncertainties or specific concerns about the Indian market. This underscores the complex interplay of domestic and foreign investor sentiment, and the influence of large transactions on the overall market perception.
The incident highlights the crucial need for a nuanced and comprehensive approach to interpreting market data. Relying solely on initial, unadjusted figures can lead to erroneous conclusions about market trends. A detailed analysis, factoring in large transactions like block deals and distinguishing between domestic and foreign investor behaviour, provides a more accurate picture of the underlying market dynamics. The Bharti Airtel block deal served as a potent reminder of the importance of critical analysis and the avoidance of overly simplistic interpretations of market data, especially when dealing with large, single-event capital flows. This case highlights the ongoing complexities of the Indian stock market and the importance of understanding the context behind headline numbers.
Source: The Airtel Block Deal Effect: Foreign funds turn net buyers in Indian equities after 9 sessions