New Delhi: Foreign investors have continued their sell-off in the Indian stock market. 39,000 crore so far this month, amid rising US bond yields, a firming dollar and prospects of more aggressive rate hikes by the Federal Reserve.
With this, the net outflow of Foreign Portfolio Investors (FPIs) from equities has reached 1.66 lakh crore so far in 2022.
Going forward, FPI According to Shrikant Chauhan, Head-Equity Research (Retail), Kotak Securities, inflows into India are likely to remain volatile, given the adverse conditions in terms of higher crude oil prices, inflation and tighter monetary policy.
“Recently, selling by FPIs is a sign of exhaustion, and domestic institutional investors (DIIs) and retail buyouts are emerging as a strong counter to FPI selling.
VK Vijayakumar, chief investment strategist, Geojit Financial Services, said, “At higher levels, FPIs may continue to sell. If global markets are stable, FPI sales will be easily absorbed by DIIs and retail buying.”
Foreign investors have been net selling in the seven months to April 2022, making massive withdrawals 1.65 lakh crore from equity.
FPIs became net investors and invested in the first week of April due to the fall in the markets 7,707 crore in equity.
However, after a short breath, they became net sellers once again in the following weeks.
FPIs have dumped net worth stocks 39,137 crore during May 2-27, data from the depository showed. There are still two trading sessions left in the month.
Vijayakumar said, “Concerns related to the possibility of recession in the US due to higher valuations in India, rising bond yields in the US, strengthening of the dollar and aggressive tightening are the factors behind the withdrawal of FPIs.
Morningstar India associate director-manager research Himanshu Srivastava said investors are also wary of fears that high inflation could hamper corporate profits and impact consumer spending.
These factors, along with the continuation of the war between Russia and Ukraine, could further distort global economic growth.
He said that on the domestic front too, with inflation rising, there are concerns over further rate hikes by the RBI and its impact on economic growth.
Selling by FPIs continued in the month. However, the week closed on a positive note. One reason for this is that global markets took negative US GDP numbers in their stride and moved higher. TradeSmart Chairman Vijay Singhania said the rub off was visible in the Indian markets, especially in the last two days of the week.
Apart from equities, FPIs pulled out a net amount of approx. 6,000 crore from the debt market during the period under review.
Apart from India, other emerging markets including Taiwan, South Korea, Indonesia and Philippines have also witnessed outflows in the month of May so far.
This story has been published without modification in text from a wire agency feed. Only the title has been changed.