FPI selling: Foreign investors continued to sell for the sixth consecutive month in March in the Indian market. This month, Foreign Portfolio Investors (FPIs) pulled out Rs 41,000 crore from the Indian equity market on anticipation of a hike in interest rates by the US Federal Reserve and the deteriorating geopolitical situation due to the Ukraine war.
1.48 lakh crore withdrawn in 6 months
Experts said, given the rise in crude prices and inflation, FPI flows may remain volatile in the near future. According to data from depositories, FPIs sold Rs 41,123 crore from the equity market last month.
At the same time, before this, Rs 35,592 crore was withdrawn in February and Rs 33,303 crore in January. Foreign investors have been pulling out capital from the equity market for the past six months and have sold Rs 1.48 lakh crore between October, 2021 and March, 2022.
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Foreign investors are selling because of these reasons
Atanu Agarwal, cofounder of UpsideAI, said, “The main reason for the sell-off of FPIs is a change in the interest rate environment and signs of easing of stimulus by the Federal Reserve.”
He said that there are many other reasons also due to which FPIs are withdrawing from the Indian market. These include reasons like expensive valuation of Indian equities, rise in crude oil prices, weakness of rupee and Russia-Ukraine conflict. “This is the reason why they are moving towards safer investment options. If there are signals from the Federal Reserve to postpone interest rate hikes, we may not see that much withdrawal.
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Indian market is comparatively expensive
Making a similar argument, Himanshu Srivastava, Associate Director – Manager Research, Morningstar India, said that foreign investors are withdrawing from Indian markets due to the US Federal Reserve’s stance, concerns about the geopolitical situation.
Nikhil Kamat, cofounder of True Becon and Zerodha, said that the Indian market is comparatively expensive and FPIs are investing in China and other markets by withdrawing capital from India.
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