FPIs pull out Rs 14,000 cr from Indian equities in June on global, domestic concerns – Times of India

New Delhi: Beware of the scenario on the global and domestic fronts, foreign investors continued to retreat from Indian Equity Market And in this month so far about Rs 14,000 crore has been withdrawn.
With this, the net outflow foreign portfolio investors ,FPI) reached Rs 1.81 lakh crore from equities so far in 2022, data from the depositories showed.
Vinod Nair, Head of Research, Geojit Financial Services, said that in future, FPI selling may continue in the near term, however, a moderation in selling is expected in the short to medium term.
“That’s because a big part of change is like financial crisisfiery monetary policy, supply crunch and high inflation Includes market prices, which were consolidating over the last 7 months. And for central banks to maintain aggressive policy over the long term, inflation must remain high,” he said.
According to the data, during June 1-10, foreign investors made a net withdrawal of Rs 13,888 crore from equities. FPIs have been continuously withdrawing money from Indian equities since October 2021.
Nair attributed the latest FPI outflows to the anticipation of a sharp Federal Reserve meeting.
“Global markets saw selling pressure in the US in anticipation of record high inflation numbers, which could force the Fed to accelerate rising interest rates. At 8.6 percent, US inflation is at a 40-year high. Stagnation. Speaking of and China’s announcement, another round of lockdown weighed heavily on investors, triggering another round of sell-offs, said Vijay Singhania, president of TradeSmart.
simultaneously, reserve Bank of India The RBI increased the repo rate by 50 basis points and revised its inflation forecast. The central bank expects inflation to remain above 6 per cent for three quarters, which will put pressure on bond yields. These factors encouraged foreign investors to head out the door, he said.
Apart from equity, FPIs pulled out a net Rs 600 crore from the debt market during the period under review. They have been withdrawing money from the loan side continuously since February.
Himanshu Srivastava, Associate Director- Manager Research, Morningstar India, said from a risk reward perspective and with interest rates rising in the US as well, Indian debt may not offer an attractive investment option to foreign investors.
Apart from India, other emerging markets including Taiwan, South Korea, Thailand and the Philippines have seen outflows so far this month.