FPIs Outflow Continues: Selling Of Foreign Investors Continues

FPIs Outflow Continues: Selling of foreign investors continues, Rs 46 thousand crores withdrawn in June so far.

Foreign investors have been continuously withdrawing their shares from the Indian stock market for the last several months.

Foreign investors have pulled out around Rs 46,000 crore from the Indian stock market so far this month, following tight monetary policy by the Reserve Bank and the US Federal Reserve, high oil prices, and volatility in the rupee.

Hitesh Jain, Lead Analyst, Institutional Equities and Yes Securities said depository data shows that net outflows from equities by foreign portfolio investors (FPIs) in 2022 have so far reached Rs 2.13 lakh crore.

With higher oil prices and a volatile rupee, FPIs are likely to stay away from emerging market assets in view of policy normalization by the US Fed and other major central banks.

FPIs Outflow Continues: He said FPI flows will resume when bonding yields in the US are at a peak and there is no Fed rate hike.

Besides, VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said if the current trend of dollar and bond yields continues, FPIs are likely to oversell.

According to the data, foreign investors have made a net withdrawal of Rs 45,841 crore from equities in June (till the 24th).

The massive selling by FPIs continued in June. They have been continuously withdrawing money from Indian equities since October 2021.

On the other hand, Vijaykumar of Geojit Financial Services says the rising dollar in the US and appreciation of bond yields are the major factors triggering FPI outflows.

Manoj Purohit, Partner and Leader, Financial Services Tax, BDO India, said the tightening of monetary policy by the RBI and the rise in global commodity prices have mainly pushed the domestic markets to the outflow of substantial cash from equity markets during the last few months.

Such withdrawal speeds were last seen when the pandemic escalated in the first quarter of 2020.

Purohit said that the ongoing military conflict between Ukraine and Russia on the global level, rising food rates, and the return of the outbreak of the epidemic have added to this.

Apart from India, selling continues in many countries.

Purohit of BDO India believes that India is still in a better position than other global markets.

Apart from India, FPIs are selling heavily in other emerging markets like Taiwan, South Korea, the Philippines, Indonesia, and Thailand.