Experts believe that due to the rise in crude oil prices and inflation, there will be volatility in FPI flows in the near future as well.
FPI: Foreign portfolio investors (FPIs) are losing confidence amid the prospect of a hike in interest rates by the US Federal Reserve and geo-political tensions due to the Russia-Ukraine war. Foreign investors pulled out Rs 41,000 crore from the Indian stock markets in March, continuing their sell-off for the sixth consecutive month. Experts believe that due to the rise in crude oil prices and inflation, there will be volatility in FPI flows in the near future as well.
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Selling continues for the sixth consecutive month
According to depository data, FPIs have pulled out a net Rs 41,123 crore from the stock markets last month. Earlier, he had withdrawn Rs 35,592 crore from the stock markets in February and Rs 33,303 crore in January. Foreign investors have been withdrawing from the shares for the last six months. Between October, 2021 and March, 2022, they have pulled out a net Rs 1.48 lakh crore from the Indian markets.
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What do experts say
Atanu Aggarwal, Co-Founder, UpsideAI said, “The main reason for the withdrawal of FPIs is the change in the interest rate environment and indications of the Federal Reserve ending incentives.” He said that there are many other reasons also due to which FPIs Withdrawals from the Indian market. These include reasons like India becoming expensive, rise in crude oil prices, weakness of rupee and Russia-Ukraine conflict. This is the reason why they are going towards safe investment option. If there was a signal from the Federal Reserve to postpone the interest rate hike, we might not have seen this level of withdrawal.
Giving a similar argument, Himanshu Srivastava, Associate Director- Manager Research, Morningstar India, said that foreign investors are withdrawing from Indian markets due to concerns about the US Federal Reserve’s stance, geo-political situation.
(Input-PTI)
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