Foreign portfolio investors have withdrawn Rs 14 thousand crore so far in June this month.
The process of withdrawal of Foreign Portfolio Investors (FPO) from the Indian stock markets continues. Foreign investors worried about developments on the domestic and global front are withdrawing money and so far in June this month, they have withdrawn 13,888 thousand crore rupees from Indian stocks. According to depository data, so far this year, FPIs have withdrawn Rs 1.81 lakh crore from the Indian stock exchanges. FPIs have been continuously withdrawing money from Indian stocks since October 2021 last year. Apart from India, FPIs have also pulled out from emerging markets such as Taiwan, South Korea, Thailand and the Philippines so far this month in June.
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Main reason for selling
According to Vinod Nair, Head of Research, Geojit Financial Services, the main selling point of FPIs is the strict monetary policy of the Federal Reserve. According to Vijay Singhania, chairman of TradeSmart, there is a sell-off globally due to inflation reaching a four-decade high of 8.6 per cent in the US and the re-imposition of lockdown in China. RBI also hiked the repo rate and raised its inflation forecast, which encouraged selling of FPIs.
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Now what is the condition of the market next?
According to Nair, this selling trend may continue in the near term but it may decline in the short and medium term. Nair said that the reason for this is that the market has already accepted the slowdown in the economy, tight monetary stance, supply problems and high inflation. In the long term, the aggressive monetary stance of central banks will continue only when inflation is high.
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Withdrawals from the bond market
Apart from equities, foreign portfolio investors have also withdrawn from the debt market this month. FPIs have pulled out Rs 600 crore from the bond market so far this month and they have been pulling money back from bonds since February this year. According to Himanshu Srivastava, Associate Director-Manager Research, Morningstar India, the Indian bond market is no longer an attractive investment option for foreign investors due to the risk reward and rising interest rates in the US.
(Input: PTI)
