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Foreign Investors Have Withdrawing Rs 1 Lakh Crore Amid Inflation, Global Concern


Foreign investors have withdrawn funds from the Indian market amid global concerns

New Delhi:

Overseas investors have withdrawn Rs 1,14,855.97 crore net from the Indian market in the current year so far, amid rising geopolitical tensions and inflation concerns.

Foreign portfolio investors have sold domestic equities worth Rs 48,261.65 crore so far this month, bringing the total so far this year to a massive Rs 1,14,855.97 crore, according to depository data.

The migration of foreign investors was largely due to inflationary pressures and the deepening global macroeconomic situation following the Russo-Ukrainian war, experts said.

This is for the sixth consecutive month foreign institutional investors have lowered their net holdings in the Indian equity market.

Foreign portfolio investors (FPIs) are worried India will be more affected by rising commodity prices, especially in crude oil, as India is a major importer.

“While the Russo-Ukrainian war has limited its direct impact on the Indian economy, given lower import dependence from these countries, higher commodity inflation poses major risks both in terms of macro parameters such as balance of payments and inflation as well as corporate income estimates due to costs. higher inputs, ”said Shibani Kurian, Senior EVP & Head of Equity Research, Mahindra Box Asset Management Company.

Ms Kurian further added that India is a net importer of crude oil and it is estimated that every 10 per cent increase in crude oil prices affects the current account deficit around 30 basis points and CPI inflation around 40 basis points and GDP around 20 basis points, all others remain constant.

“However, unlike in the past, this time there is some balance from the domestic point of view, including high forex reserves, strong FDI flows and an increase in export growth,” he said.

According to depository data, foreign investors withdrew Rs 28,526.30 crore from Indian equities in January, Rs 38,068.02 crore in February and Rs 48,261.65 crore in March so far.

“The Indian equity market continues to be troubled, influenced and reacting to the rising news flow on the global front, especially in relation to the geopolitical situation and Fed rhetoric. Two key and observable challenges for the market in the near term are continued inflationary pressures and rising bond yields. , “said Milind Muchhala, Executive Director, Julius Baer.

While inflationary pressures have increased in recent months, geopolitical conditions have worsened, as Ukraine and Russia are big players in energy and some commodities, and the prices of some of these commodities have risen since the beginning of the year. the crisis, added Mr Muchhala.

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