Foreign portfolio investors (FPIs) continued to be net sell-offs in the Indian market. To date, the outflow of foreign funds is near 2 lakh crore in the Indian equity market in less than six months this year. Selling pressure from FPIs in domestic equities is expected to continue in the near term, especially as long as inflation remains at a multi-year high and forces more aggressive interest rate hikes out of the RBI’s comfort zone.
NSDL data showed that till June 17 this month, FPI stood on the outflow 31,430 crore in the equity market. Whereas, in 2022 so far, till date, the outflow has climbed 1,98,585 crore in domestic equity.
NSDL data is compiled on the basis of reports submitted by the Custodian to SEBI/Depositories and constitutes the trades carried out by the FPIs till the last trading day(s).
However, data from Dr VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said that from the current year 2022 to June 17, FPIs have sold. equity until 2,02,244 crores.
FPI outflows remained flat in May this year 39,993 crore, and was on outflow in April 17,144 crore as per NSDL data.
That said, in the first quarter of FY23 so far till June 17, FPIs have pulled out largely 88,567 crore from the equity market.
So far this year, NSDL data showed that the highest selling took place in March 41,123 crore, while the outflow was on 35,592 crore and 33,303 crore in February and January respectively. In the period from January to March, the total outflow is approx. 1,10,018 crores.
Overall, the total outflow of FPIs including equity, debt, debt-VRR, and hybrid market was 2,08,587 crores.
Vijayakumar said, “FPIs are also selling heavily in other emerging markets such as Taiwan and South Korea. The strengthening of the dollar and bond yields in the US are major triggers for FPI selling. Since the Fed and other central banks such as Bank of England and The Swiss Central Bank has raised rates, with rising yields synchronously increasing rates globally. Money is moving from equities to bonds. In India, FPIs continue to sell in financials and IT where their holdings are the largest. “
Earlier today, Vijayakumar also said, “The major theme affecting equity markets globally is the result of simultaneous global monetary tightening and economic slowdown. The chances of US slipping into recession are now very high. Markets are easing these concerns.” The PE of the S&P 500 is now around 16, close to the long-term average. Europe is trading at around 11x. The market will be down compared to the economy.”
According to Geojit’s chief investment strategist, valuations in India have declined, but are still above the long-term average. Hence, FPIs will continue to sell, limiting the relief rally to come any time.