FPI Investors Pulled Out 6400 Crore In May 2022 Till Now Foreign Portfolio Investment

FPI Investors Pulled Out 6400 Crore In May 2022 Till Now Foreign Portfolio Investment
Written by Arindam
FPI Investors Pulled Out 6400 Crore In May 2022 Till Now Foreign Portfolio Investment

Foreign Portfolio Investment: Foreign portfolio investors have pulled out more than Rs 6,400 crore from the Indian stock markets in the first four trading sessions in the month of May. Last week, the Reserve Bank of India and the US central bank Federal Reserve have increased interest rates, which has a direct effect on FPIs.

ups and downs will continue
Kotak Securities Head of Equity Research Shrikant Chauhan has said that due to higher crude oil prices, tightening of monetary stance and other factors, FPI inflows will remain volatile in the near future.

Why is there constant selling?
FPIs have been net sellers in the Indian markets for seven consecutive months till April 2022 and have withdrawn over Rs 1.65 lakh crore from equities. The main reason for this has been the deteriorating geopolitical situation amid fears of a hike in interest rates by the US central bank.

Selling going on for 6 months
Let us tell you that in the first week of April after selling for six consecutive months, FPIs had invested Rs 7,707 crore in the Indian stock markets. Since then they have been selling continuously. Their selloff started in the week of low trading sessions from April 11 to 13 and continued in the following weeks as well.

Markets were closed on 3 May
According to depository data, FPIs have sold shares worth Rs 6,417 crore during May 2 to 6. On May 3, the markets were closed on Eid.

Central banks are raising interest rates
TradeSmart Chairman Vijay Singhania said, “Central banks across the world are increasing interest rates, which is having an impact on the stock markets. Due to this FPIs are also selling ‘indiscriminately’.

CRR also increased
Himanshu Srivastava, Associate Director-Manager Research, Morningstar India, also expressed a similar opinion, saying that the past week has been full of developments. On May 4, the Reserve Bank suddenly increased the repo rate by 0.4 percent. Apart from this, an increase of half a percent has also been seen in the CRR, which will be applicable from May 21.

There may be further increase
Srivastava said that due to this move of the Reserve Bank, there was a tremendous reaction in the market and since then it has been coming down continuously. At the same time, the Federal Reserve also increased interest rates by half a percent on the same day. This is the highest increase in interest rates in two decades. Srivastava said that this has created an apprehension that there may be a bigger increase in interest rates going forward. Not only this, the Bank of England has also raised its key rates to their all-time high since 2009.

Withdraw Rs 1085 crore
Apart from shares, FPIs have also pulled out Rs 1,085 crore from the loan or bond market during the period under review. Singhania said that this trend will continue in the future as well and the selling of foreign investors may continue.

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