Mumbai. The year 2022 will also be remembered for the selling by foreign investors (FPIs) in the Indian stock markets. This year, FPIs have made a record fund withdrawal of more than two and a half lakh crores from the Indian markets. Foreign investors have remained a seller in the Indian stock market for the last nine consecutive months. Its effect is also being seen in the Indian stock market.
According to NSDL data, so far this year, FPIs have pulled out a whopping ₹2,24,790 crore from the Indian equity market, which is about 95% of the total sell-offs in the overall Indian market. The outflow of foreign funds in the Indian market including equity, debt, debt-VRR and hybrid is about Rs 2,36,672 crore.
Withdrawals of more than two lakh crores in the first half
Overall, foreign investors saw record fund withdrawals in June. The total withdrawal from the equity market in June stood at Rs 50,203 crore. This figure is the highest month by month in the year 2022. From the period April-June 2020, FPI outflows into Indian equities stood at Rs 1,07,340 crore. At the same time, in the first half of 2022 (January-June), about Rs 2,17,358 crore funds went out of the market.
why the selling
FPI selling from the Indian market is going on since October 2021. This intensified further after the Russo-Ukraine War in February. Market experts believe that after the Indian stock set high, foreign investors started booking profits. Regarding the valuation of the market, it was said that the Indian market is looking expensive at this level. So the selling continued.
After this the war started and the global situation worsened. Worldwide inflation started rising and the supply chain was disturbed. Fears of a recession in the US and continued strengthening of the dollar kept the FPI selling on the rise instead of stopping. However, in July now its pace seems to be slowing down.
Will the sell stop or will it continue?
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said, “With the uncertainty around the foreign exchange market and the continued strengthening of the dollar, it is unlikely that FPIs will aggressively buy in the Indian market. At higher levels, they can again become sellers.
Kotak Securities Head Equity Research (Retail) Shrikant Chauhan said that going forward, FPI inflows will remain volatile. FPIs will continue to be sellers in emerging markets due to geopolitical risks, rising inflation and tightening of monetary stance by central banks.
FIRST PUBLISHED : July 18, 2022, 08:15 IST