FPIs pull out Rs 14,000 crores from Indian equities in June on global, domestic concerns 

With this, net outflow by foreign portfolio investors (FPIs) from equities reached Rs 1.81 lakh crore so far in 2022, data with depositories showed.

Published: 12th June 2022 11:52 AM  |   Last Updated: 12th June 2022 11:52 AM   |  A+A-

Image for representational purpose only. (File | Photo)

Image for representational purpose only. (File | Photo)

By PTI

NEW DELHI: Wary of the scenario on the global and domestic fronts, foreign investors continued to withdraw from Indian equity markets and pulled out close to Rs 14,000 crore in this month so far.

With this, net outflow by foreign portfolio investors (FPIs) from equities reached Rs 1.81 lakh crore so far in 2022, data with depositories showed.

Going forward, the FPIs' selling may continue in the near-term, however, a moderation in sell-off is expected during the short to medium-term, Vinod Nair, Head of Research at Geojit Financial Services, said.

"This is because a large part of the changeover like economic slowdown, hawkish monetary policy, supply constraints and high inflation is factored in, in the market prices, which was consolidating over the last 7 months. And for central banks to maintain the aggressive policy in long-term, the inflation must remain high," he added.

According to the data, foreign investors withdrew a net amount of Rs 13,888 crore from equities during June 1-10. FPIs have been incessantly withdrawing money from Indian equities since October 2021. Nair attributed the latest FPI outflow to the anticipation of a hawkish Federal Reserve meeting.

"Global markets witnessed selling pressure in anticipation of record-high inflation numbers in the US, which could force the Fed to accelerate increasing interest rates. At 8.6 per cent, the US inflation is at a 40-year high.

Talks of stagnation and China announcing another round of lockdowns all weighed down on investors, prompting another round of selling," Vijay Singhania, Chairman, TradeSmart, said. In addition, RBI also increased repo rate by 50 basis points and revised upwards its inflation projection.

The central bank expects inflation to remain above 6 per cent for three quarters which will add pressure on bond yields. These factors encouraged foreign investors to continue their walk out of the door, he added.

Apart from equities, FPIs withdrew a net Rs 600 crore from the debt market during the period under review. They have been incessantly withdrawing money from the bedt side since February.

From the risk-reward perspective and with interest rates rising in US too, Indian debt may not offer an attractive investment option to foreign investors, Himanshu Srivastava, Associate Director - Manager Research, Morningstar India, said.

Apart from India, other emerging markets, including Taiwan, South Korea, Thailand and the Philippines witnessed outflow in this month so far.



Comments

Disclaimer : We respect your thoughts and views! But we need to be judicious while moderating your comments. All the comments will be moderated by the newindianexpress.com editorial. Abstain from posting comments that are obscene, defamatory or inflammatory, and do not indulge in personal attacks. Try to avoid outside hyperlinks inside the comment. Help us delete comments that do not follow these guidelines.

The views expressed in comments published on newindianexpress.com are those of the comment writers alone. They do not represent the views or opinions of newindianexpress.com or its staff, nor do they represent the views or opinions of The New Indian Express Group, or any entity of, or affiliated with, The New Indian Express Group. newindianexpress.com reserves the right to take any or all comments down at any time.

flipboard facebook twitter whatsapp