New Delhi: After investing money in the last two months, foreign investors again became sellers in September and pulled out over Rs 7,600 crore from the Indian stock markets. US Fed And a sharp fall in the rupee.
With this, the total outflow foreign portfolio investors (FPIs) from Indian equity markets have so far reached Rs 1.68 lakh crore in 2022, data from the depositories showed.
FPI Experts said flows are expected to remain volatile in the coming months due to global and domestic factors.
“The expansionary fiscal policies of the UK government impacted global money markets amid rising global inflation and resulted in risk-off sentiment in equities,” it said. Shrikant ChauhanHead – Equity Research (Retail), Kotak Securities.
On the domestic front, there are some fuel-related concerns, apart from a marginal decline in GDP estimates, he said.
According to the data, FPIs sold equities totaling Rs 7,624 crore in September. This comes after net investment of Rs 51,200 crore in August and around Rs 5,000 crore in July.
Earlier, FPIs were net sellers in the Indian equity markets for nine consecutive months from October 2021.
Though FPIs started the month of September on a positive note, the pace of net inflows was lower as compared to August due to heightened global uncertainty.
“Aggressive rate hike by the US Fed to control rising inflation, sharp depreciation in the rupee, rise in US bond yields and fears of a global recession fueled investor pessimism.
“The Russia-Ukraine war has also hurt sentiments,” said Himanshu Srivastava, Associate Director- Manager Research, Morningstar India.
The outlook turned unfavourable after a warmer-than-expected inflation report dashed expectations US Federal Reserve Will reduce the rate hike in the coming months.
August US inflation rose 0.1 percent to 8.3 percent from the previous month. Inflation in August last year was 8.5 per cent.
Besides, a 75 basis points (bps) rate hike by the US Fed for the third consecutive month last month to control inflation and indications of further aggressive rate hikes have shielded investors from risk. Srivastava said it has also raised concerns over global economic growth and fears of the US economy going into recession.
Besides, a sharp depreciation in the rupee also triggered FPI outflows. He said rising bond yields in the US has given investors an opportunity to move away from riskier markets during these uncertain times and invest in safe havens such as US Treasuries.
“With the dollar strengthening in September, there is a rush to protect the US dollar… the Indian rupee may lose more ground in the times to come and so an exit now and a re-entry later makes sense for some. may come,” said Alok Jain, Smallcase Manager and Founder, Weekend Investing.
He said FPIs may exit emerging market funds under redemption pressure, of which India is a part.
On the other hand, foreign investors have invested Rs 4,000 crore in the debt market during September.
Apart from India, FPI inflows were negative for Philippines, South Korea, Taiwan and Thailand, while it was positive for Indonesia during the period under review.
With this, the total outflow foreign portfolio investors (FPIs) from Indian equity markets have so far reached Rs 1.68 lakh crore in 2022, data from the depositories showed.
FPI Experts said flows are expected to remain volatile in the coming months due to global and domestic factors.
“The expansionary fiscal policies of the UK government impacted global money markets amid rising global inflation and resulted in risk-off sentiment in equities,” it said. Shrikant ChauhanHead – Equity Research (Retail), Kotak Securities.
On the domestic front, there are some fuel-related concerns, apart from a marginal decline in GDP estimates, he said.
According to the data, FPIs sold equities totaling Rs 7,624 crore in September. This comes after net investment of Rs 51,200 crore in August and around Rs 5,000 crore in July.
Earlier, FPIs were net sellers in the Indian equity markets for nine consecutive months from October 2021.
Though FPIs started the month of September on a positive note, the pace of net inflows was lower as compared to August due to heightened global uncertainty.
“Aggressive rate hike by the US Fed to control rising inflation, sharp depreciation in the rupee, rise in US bond yields and fears of a global recession fueled investor pessimism.
“The Russia-Ukraine war has also hurt sentiments,” said Himanshu Srivastava, Associate Director- Manager Research, Morningstar India.
The outlook turned unfavourable after a warmer-than-expected inflation report dashed expectations US Federal Reserve Will reduce the rate hike in the coming months.
August US inflation rose 0.1 percent to 8.3 percent from the previous month. Inflation in August last year was 8.5 per cent.
Besides, a 75 basis points (bps) rate hike by the US Fed for the third consecutive month last month to control inflation and indications of further aggressive rate hikes have shielded investors from risk. Srivastava said it has also raised concerns over global economic growth and fears of the US economy going into recession.
Besides, a sharp depreciation in the rupee also triggered FPI outflows. He said rising bond yields in the US has given investors an opportunity to move away from riskier markets during these uncertain times and invest in safe havens such as US Treasuries.
“With the dollar strengthening in September, there is a rush to protect the US dollar… the Indian rupee may lose more ground in the times to come and so an exit now and a re-entry later makes sense for some. may come,” said Alok Jain, Smallcase Manager and Founder, Weekend Investing.
He said FPIs may exit emerging market funds under redemption pressure, of which India is a part.
On the other hand, foreign investors have invested Rs 4,000 crore in the debt market during September.
Apart from India, FPI inflows were negative for Philippines, South Korea, Taiwan and Thailand, while it was positive for Indonesia during the period under review.