The Airtel Block Deal Effect: Foreign funds turn net buyers in Indian equities after 9 sessions

Foreign investors have turned net buyers in the Indian equity cash market after 9 sessions of sustained selling. That’s what the provisional numbers from the Stock Exchange (NSE) are pointing to. But it may not be time to celebrate just yet, because this buy number exists only on paper.

Data from the exchange says that Foreign Portfolio Investors (FPIs) provisionally bought shares worth ₹4,756.56 crores on a net basis. Domestic Institutional Investors (DIIs) net bought equity to the tune of ₹3,072.19 crores. However, these numbers include the Bharti block deal, in which 5.11 crore shares changed hands at an average price of ₹ 1,660 per share. That works out to ₹8,485.11 crores.

Data from the NSE on block & bulk deals shows that of the ₹8,485.11 crores, foreign investors or FIIs picked up ₹5,130.73 crore rupees worth of Bharti Airtel shares on offer from Indian Continent Investment Limited (a Bharti Airtel promoter entity), while DIIs bought ₹1,204.36 crores worth of shares. The balance shares, worth ₹2,000 crores, were picked up by Bharti Airtel itself.

Thus, if we were to adjust for the block deals – ie, remove them from the equation completely - foreign investors have actually sold shares worth ₹344.17 crores on a net basis. This means they have been withdrawing money from the Indian markets for the tenth session in a row. Domestic funds, meanwhile, remain buyers of Indian equity even after accounting for the block deal. Their adjusted net buy number stands at 1,868.83 crores.

This means that foreign funds have not really returned to the Indian equities yet, and the perception that there is still froth in the market after the recent sharp correction continues to hold sway. So far, FIIs have been net sellers every day for the last 9 trading days, withdrawing a net of ₹28,645.03 crore in the process. Domestic funds, however, continue to pump money into the equity markets. In the last 9 days alone, they have net bought equity to the tune of ₹27,676.93 crore.

Some of the big FIIs who bought Bharti Airtel shares through the block window include Goldman Sachs Trust II, GQG Partners, Vanguard, Switzerland-based Reliance Trust Insti, Fidelity (through multiple schemes), India Acorn Fund Ltd,  and Nordea.

Some of the big DIIs who participated in the block deal as buyers include SBI Life Insurance Company, Pension System (NPS) Trust, and ICICI Prudential.