Foreign investors pull out ₹6,000 cr from Indian markets in this Oct

In the wake of the strength of the US dollar against the rupee, foreign investors have pulled out 6,000 crore from Indian stock markets so far this month. With this, the total outflow by Foreign Portfolio Investors (FPIs) has reached 1.75 lakh crore so far in 2022, according to the data shown by deposits.

Shrikant Chouhan, Head-Equity Research (Retail) at Kotak Securities said the flow of FPIs is expected to remain volatile in the coming months due to ongoing geopolitical risk, elevated inflation, an expectation of rising government bonds, etc., according to PTI reports.

“It is unlikely that FPIs will sell heavily in the near term. But they will not become sustainable buyers until the dollar starts to fall. This in turn will depend on the trajectory of US inflation and the monetary stance of the Fed,” UK Vijayakumar, Chief Investment Strategist at Geojit Financial Services told PTI.

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According to the data, FPIs retreated 5,992 crore from shares in October (up to 21). However, in recent days, FPIs had slowed down their sales significantly. A major trend in the market is that continued purchases by domestic institutional investors (DIIs) and retail investors have made the sale of FPIs overwhelming.

“If FPIs want to buy the stocks they have sold, they will have to pay a much higher price. This realization is slowing their sales, even in the negative macro construct where US bond yields are rising and the rupee is falling in value,” he added. Vijayakumar. .

The take-up so far this month came after an outflow of more than 7,600 crore in September on the aggressive stance of the US Federal Reserve and the sharp depreciation of the rupee.

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Before that, FPIs made a net investment of 51,200 crore in August and almost 5,000 crore in July. Prior to July, foreign investors were net sellers of Indian equities for nine months in a row, starting in October last year, PTI reported.

Himanshu Srivastava, Associate Director – Manager Research, Morningstar India, said the latest FPI outflows were largely driven by concerns about monetary policy tightening by the US Fed and other global central banks, which could hamper global economic growth. .

The rupee fell sharply last week as it hit an all-time low of . reached 83 against the dollar. Flows of FPIs have been inconsistent in recent months as they continued to change their stance and follow the rapidly changing investment scenario.

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Broader sentiment was not conducive, although there was an occasional breather.

Srivastava said that expectations of further and aggressive rate hikes by the US Fed, depreciation of the rupee, fears of a recession and the continuation of the conflict between Russia and Ukraine would continue to negatively impact foreign flows to Indian equities. In terms of sectors, FPIs in October were vendors in financials, FMCG and IT.

In addition to equities, foreign investors have also withdrawn 1,950 crore of the debt market during the reporting period. Excluding India, FPI flows have been negative for Thailand and Taiwan so far this month.

(with PTI inputs)

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