Since hitting a two-and-a-half-month high on April 4, the Sensex has lost 4,149 points or nearly 7% in nine sessions. The withdrawal has been mainly on account of sell-off by foreign portfolio investors (FPIs).FPI) In eight of these nine sessions, the Sensex closed at a lower level. BSE data shown. The increase in FPI sell-offs over the past few weeks was driven by rising inflation in most developed markets, raising expectations of a sharp increase in interest rates.
In the US, retail inflation is at a more than four-decade high, news reports said, with the US Federal Reserve raising rates six times this year even more likely. This is forcing foreign fund managers to avert risk and withdraw money from emerging markets, including India, said market players.
After a few days of strong net inflows, the monthly figure has again entered negative territory as FPIs turned sellers in the stock market. Data from CDSL and BSE shows that in April so far, FPIs have netted around Rs 10,000 crore from the stock market, making it the seventh consecutive month of net outflows.
Given the rising inflationary pressures and the adverse conditions of the global economy from geopolitical factors, this may continue for some time. A report by forex advisory firm IFA Global said major central banks that are preparing to hike interest rates to fight inflation are also facing a general demand from major financial markets in the first round of global “quantitative tightening”. Preparing pullbacks. This is expected to restrict credit and increase stress on the already slowing world economy. The initial enthusiasm about the proposed merger between leading housing finance company HDFC and top private sector lender HDFC Bank has faded. In terms of combined market capitalization, the shareholders of both the entities together have suffered a loss of Rs 2.7 lakh crore. Official data shows that it had come down to Rs 11.3 lakh crore from a combined mcap of Rs 14 lakh crore at the close of business on April 4, the day the merger was announced.
On one hand, analysts expect some regulatory hurdles for the merger. On the other hand, investors weren’t too happy with HDFC Bank’s latest quarterly data which, according to some analysts, was given a huge boost by lower provisioning rather than operating income. Since the April 4 highs for these two stocks, HDFC stock is down 20%, while the bank’s share price is down 19%.