Last Update: February 05, 2023, 16:04 IST
FPIs pulled out a net Rs 28,852 crore from equities in January.
FPI inflows are expected to remain volatile as Indian equities continue their massive underperformance vis-à-vis global markets
Foreign investors pulled out Rs 28,852 crore from Indian equities in January, the worst outflow in the last seven months, mainly due to the attractiveness of Chinese markets. This comes after net inflows of Rs 11,119 crore in December and Rs 36,238 crore in November, data from the depositories showed.
Going forward, FPI inflows are expected to remain volatile as Indian equities continue their massive underperformance compared to global markets, said Shrikant Chauhan, head of equity research (retail), Kotak Securities.
According to the data, FPIs pulled out a net Rs 28,852 crore from equities in January. This was also the biggest monthly withdrawal by FPIs since June 2022, when they pulled out Rs 50,203 crore from equities. There has been a net outflow of over Rs 5,700 crore from equities in the first week of February, following the withdrawal in January.
FPI selling India VK Vijayakumar, chief investment strategist at Geojit Financial Services, said buying in cheap markets like China, Hong Kong and South Korea where valuations are attractive is a must. “The Indian market has underperformed so far this year because of this strategy of ‘short India and long other cheap markets’,” he added.
Vijayakumar said China, Hong Kong and South Korea have registered a growth of 4.71 per cent, 7.52 per cent and 11.45 per cent respectively so far this year, while India has seen a decline of 1.89 per cent.
Himanshu Srivastava, Associate Director (Manager Research), Morningstar India, said FPIs turned cautious towards Indian equities ahead of the Union Budget and the US Federal Reserve meeting. Interestingly, both turned out to be positive indicators.
“The quarterly percentage point rate hike by the US Fed signaled a decline in the quantum of rate hikes. The Union Budget was also positive and focused on infrastructure and economic growth,” he said.
However, these two factors could not lift the sentiments in a big way due to sharp selling in shares of Adani group companies, which led to a fall in the market. Besides, apprehensions that Adani might hit lenders weighed on banking stocks. However, the Reserve Bank of India’s message that the Indian banking system is healthy and the late rally in banking stocks led to an improvement in sentiment.
On the other hand, FPIs have invested Rs 3,531 crore in the debt markets during the period under review.
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(This story has not been edited by News18 staff and is published from a syndicated news agency feed)