Selling by foreign investors
Foreign portfolio investors were net sellers in October and have pulled out shares worth Rs 58,711 crore from the market so far this month. The escalating conflict between Israel and Iran, sharp rise in crude oil prices and strong performance of the Chinese market led to selling by foreign investors. Earlier, foreign investors had invested Rs 57,724 crore in September. This was the highest level in nine months. Foreign portfolio investors (FPIs) continued to pump money into the equity market since June, after pulling out Rs 34,252 crore in April-May, according to depository data.
What are the signs ahead?
Overall, except in January, April and May, FPIs have been net buyers this year. Himanshu Srivastava, Morningstar Investment Research India, said, “Global factors such as global developments and interest rate situation will play an important role in determining the inflow of foreign investment into Indian stock markets in the coming times.” According to , FPIs made a net withdrawal of Rs 58,711 crore from equities between October 1 and October 11. “The escalating conflict between Israel and Iran, especially in West Asia, has increased uncertainty in the market,” said Vineet Bolingkar, head of research at Ventura Securities. Due to this, global investors are avoiding risk. FPIs have become cautious and are pulling money out of emerging markets.
surge in brent crude
He said that due to the global crisis, the price of Brent crude reached $79 per barrel on October 10. Whereas on September 10 it was $69 per barrel. This poses a risk of increasing inflation and financial burden in India. VK Vijayakumar, chief investment strategist, Geojit Financial Services, believes that FPIs are adopting a ‘sell in India, buy in China’ strategy after China announced monetary and fiscal measures to stimulate the slowing economy. FPIs are investing money in shares in China, which are still relatively cheap. Overall, all these reasons have created a temporary disruption in the Indian stock market. So far this year, FPIs have invested Rs 41,899 crore in equity and Rs 1.09 lakh crore in the bond market.
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