According to Shrikant Chauhan, Head Equity Research (Retail), Kotak Securities, the trend of FPIs will remain volatile going forward.
FPI: The selling of foreign portfolio investors (FPIs) continued in June due to the increase in interest rates by the US central bank, high inflation and high valuation of shares. So far this month, FPIs have withdrawn Rs 31,430 crore from Indian stocks. This information has been obtained from the data of the depository. In this way, in the current year i.e. 2022, FPIs have sold shares worth Rs 1.98 lakh crore so far. According to the data, FPIs have pulled out a net Rs 31,430 crore from the Indian stock markets this month till June 17. FPI selling continues from October 2021.
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How will be the trend of investors going forward?
Shrikant Chauhan, Head Equity Research (Retail), Kotak Securities said, “FPIs will remain volatile going forward. FPIs remain sellers in emerging markets due to geo-political tensions, rising inflation, tightening of monetary stance by central banks.
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What is the opinion of experts
- VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said, “Global investors are reacting to the rising risk of recession across the world. Amidst rising inflation, the Federal Reserve has increased interest rates by 0.75 percent. The US central bank has indicated to take a tougher stance going forward.
- He said that FPIs are mainly selling because of the strengthening of the dollar and rising yields on bonds in the US. The Federal Reserve, the Bank of England and the central bank of Switzerland have raised interest rates. Due to this, FPIs are moving from stocks to bonds.
- Vijay Singhania, Chairman, TradeSmart, said, “At a time of uncertainty when bonds offer safety of capital and better returns, investors are sure to sell. The US markets have seen the biggest weekly decline since March 2020.
- He said that inflation is a matter of concern on the domestic front and the Reserve Bank is increasing policy rates to check it.
- At the same time, Himanshu Srivastava, Associate Director-Manager Research, Morningstar India, believes that after the aggressive increase in interest rates by the Federal Reserve, the Reserve Bank will also increase policy rates in the next two-quarters.