A view of BSE building in Mumbai. file | Photo credit: Vivek Bendre
global economic factors such as inflationary pressuresmonetary tightening by central banks, and fear of recession stressed in advanced economies FPI will sell in Indian markets, Economic Survey 2022-23 Said on January 31, 2023.
Besides, investors were sitting on gains in Indian stocks that could be realized to offset losses elsewhere, the survey said.
Due to these factors foreign portfolio investors (FPIs) ₹ 16,153 crore net withdrawal Both equity and debt segments saw net outflows from Indian capital markets during April-December FY23, as compared to outflows of ₹5,578 crore in the year-ago period.
Segment-wise, FPIs netted ₹11,421 crore from the equity market and ₹12,400 crore from the debt market. On the other hand, they infused a net amount of ₹8,662 crore through the voluntary debt retention route (VRR) during the period under review.
However, due to strong macroeconomic fundamentals of the Indian economy and improving time-to-market risk aversion, there has been an increase in assets under custody of FPIs despite outflows driven by global factors, the survey said.
Total assets with FPIs increased by 3.4% to Rs 54 lakh crore at the end of November 2022 as against Rs 52.2 lakh crore at the end of November 2021.
Undeterred by withdrawals by FPIs, Indian stock markets posted positive returns during April-December 2022 as investments by domestic institutional investors (DIIs) acted as a countervailing force against FPI outflows, largely correcting the Indian equity market Relatively less sensitive to
The Indian stock market witnessed a resilient performance, with the bluechip index Nifty 50 registering a return of 3.7% during April-December 2022, and the BSE benchmark Sensex closing December 2022 higher by 3.9% from its closing level on March 31. 2022.
Even among major emerging market economies, India outperformed its counterparts in April-December 2022, while global stock markets declined due to geopolitical uncertainty.
“Net DII inflows and net investments by mutual funds in equities were observed during FY23 (up to November 2022),” the survey said.
The 42-member mutual fund industry sees net inflows of ₹70,000 crore in 2022 (till November), as against ₹2.5 lakh crore a year ago.
On a year-on-year basis, the assets under management (AUM) of the mutual fund industry grew by 8.1% to ₹40.4 lakh crore at the end of November 2022, due to the performance of the market, despite lower net inflows as compared to the previous year.
Mutual fund inflows this year included net inflows of ₹90,000 crore into equity-oriented schemes and ₹1,091 crore into solution-oriented schemes. However, debt schemes saw a net outflow of ₹1.1 lakh crore and hybrid schemes ₹13,649 crore.
According to the survey, interest rate cycle, liquidity requirements and increase in advance tax commitments by corporates mainly affected withdrawals from liquid funds and hybrid schemes.