Foreign Investors Sold Indian Shares Worth Rs 12,300 Crore In April So Far -By ASC

The FPI withdrew Rs 12,300 cr from equities in April following concerns of a US Fed rate hike

New Delhi:

Concerns of an aggressive rate hike by the US Fed continued to weigh on investor sentiment with foreign investors pulling out nearly Rs 12,300 crore from the Indian equity market so far this month.

Going forward, foreign flows into Indian equities could continue to come under pressure following an impending rate hike by the US Fed, uncertainty surrounding the Russo-Ukrainian war, volatile crude oil prices, high domestic inflation figures and weak quarterly results, said the expert.

Foreign portfolio investors (FPIs) remained net sellers for six months to March 2022, withdrawing a substantial net amount of Rs 1.48 lakh crore from equities. This is largely behind expectations of a rate hike by the US Federal Reserve and due to the deteriorating geopolitical environment following Russia’s invasion of Ukraine.

After six months of lavish selling, FPI became a net investor in the first week of April and invested Rs 7,707 crore in equities. After a short break, once again they changed the net seller to a price of over Rs 4,500 crore during the shortened April 11-13 holiday week and the sale resumed the following week as well.

This leaves foreign investors selling net to Rs 12,286 crore in the month so far (April 1-22), data with depositories shows.

The sharp sell -off could be attributed to weak global indicators after US Federal Reserve Chairman Jerome Powell hinted at a 50 basis point rate hike in May.

“Concerns of an aggressive rate hike by the US Fed, continue to weigh on investor sentiment. This may prompt investors to once again take a cautious stance on their investments in emerging markets such as India,” said Himanshu Srivastava, Associate Director – Research Manager, Morningstar India. said.

Manish Jeloka, Joint Head of Products & Solutions, Sanctum Wealth, said that its easy money will be withdrawn as the central bank has started withdrawing excess liquidity amid a risk aversion scenario due to geopolitical tensions.

He further said that rising interest rates in developed markets are usually accompanied by withdrawals from emerging markets.

In addition to equities, FPI issued Rs 1,282 crore net from the debt market during the period under review.

According to Srivastava, there is nothing at the moment that can please foreign investors and persuade them to invest in the Indian equity market.

“Apart from the impending rate hike by the US Fed, the uncertainty surrounding the Russia-Ukraine war, high domestic inflation figures, volatile crude oil prices and weak quarterly results do not give a very positive picture. In such a scenario, the FPI is typically take time to wait. and observe the approach until a clearer clarity emerges, “he said.

Under certain conditions and the rapidly changing global landscape, foreign flows into Indian equities could continue to be under pressure, until there is a change in fundamental drivers and investment scenarios, he added.

Given the pressure in terms of high crude oil prices, Inflation, lower GDP, etc., FPI flows are expected to remain volatile in the near term, Shrikant Chouhan, Head of Equity Research (Retail), Box Securities, said.

Apart from India, other emerging markets including Taiwan, South Korea and the Philippines saw outflows in April to date.


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