Withdrawal Of FPIs From The Indian Stock Market Continues

Withdrawal of FPIs from the Indian stock market continues, with Rs 6400 crore withdrawn in May so far.

Foreign investors have pulled out over Rs 6,400 crore from the Indian equity market in the first four trading sessions of the current month.

The withdrawal was made at a time when the Reserve Bank of India (RBI) and the US Federal Reserve raised interest rates.

Apart from equities, FPIs pulled out a net amount of Rs 1,085 crore from the debt market during the period under review.

Kotak Securities Head-Equity Research (Retail) Shrikant Chauhan said that in view of the adverse conditions in terms of high crude oil prices, inflation, tight monetary policy, etc., FPI inflows into India are expected to remain volatile in the near future.

Withdrawal of FPIs: Foreign portfolio investors (FPIs) remained net sellers for the seven months to April 2022, pulling out a huge amount of over Rs 1.65 lakh crore from equities.

This was largely due to anticipation of a rate hike by the US Federal Reserve and the deteriorating geopolitical environment following Russia’s invasion of Ukraine.

FPIs had turned into net investors in the first week of April after six months of selling and had invested Rs 7,707 crore amid the fall in the markets.

But after that, they once again became net sellers and the selling continued in the subsequent weeks. doing.

FPI inflows in the month of May so far have remained negative. During May 2-6, foreign investors have sold about Rs 6,417 crore.

This is revealed by the depository data. On May 3, business was closed in the market on the occasion of Eid.

Vijay Singhania, Chairman, TradeSmart said, “With central banks across the world pressing the panic button and increasing interest rates, there has been a change in the sentiment in the equity markets. Foreign investors are continuing to sell.”

Himanshu Srivastava, Associate Director- Manager Research, Morningstar India, also made a similar statement saying that this week has been very important.

The RBI in an off-cycle monetary policy review on May 4 raised the policy repo rate by 40 bps with immediate effect and the cash reserve ratio by 50 bps. This led to a sharp reaction in the markets.