Exodus of overseas cash from the Indian fairness markets continues unabated with overseas portfolio traders (FPIs) pulling out over Rs 35,000 crore to date this month on issues over the prospects of extra aggressive price hike by US Fed and appreciation of the greenback.
With this, internet outflow by FPIs from equities reached Rs 1.63 lakh crore to date in 2022.
Going forward, FPIs move in India is to stay risky within the close to time period, given the headwinds when it comes to elevated crude costs, inflation, tight financial coverage, amongst others, stated Shrikant Chouhan, Head – Equity Research (Retail), Kotak Securities.
“Since the mother market, US, is weak and dollar is strengthening, FPIs are likely to continue selling in the near term,” V Okay Vijayakumar, Chief Investment Strategist at Geojit Financial Services, stated.
Foreign traders remained internet sellers for seven months to April 2022, withdrawing a large internet quantity of over Rs 1.65 lakh crore from equities.
After six months of promoting spree, FPIs turned internet traders within the first week of April as a result of correction within the markets and invested Rs 7,707 crore in equities.
However, after a brief breather, as soon as once more they turned internet sellers throughout the holiday-shortened April 11-13 week, and the sell-off continued within the succeeding weeks as nicely.
FPI flows proceed to stay unfavourable within the month of May until date and have dumped equities value Rs 35,137 crore throughout May 2-20, knowledge with depositories confirmed.
“The major factor behind the relentless FPI selling is the appreciation of the dollar which has taken the dollar index above 103. Also, India is the major emerging market where FPIs are siting on big profits and the market is very liquid to absorb FPI selling,” Mr Vijayakumar stated.
US Fed has hiked charges twice this 12 months to battle surging inflation attributable to the disruption in provide chain because of the warfare between Russia and Ukraine.
On the home entrance too, issues over surging inflation in addition to additional price hikes by the RBI and its impression on the financial development loomed massive.
Apart from equities, FPIs withdrew a internet quantity of Rs 6,133 crore from the debt market throughout the interval below overview.
Apart from India, different rising markets, together with Taiwan, South Korea, Indonesia and the Philippines, witnessed outflow in May until date.