Foreign investors have pulled out Rs 12,300 crore from Indian markets so far this month amid fears of an aggressive rate hike by US central bank Federal Reserve. Analysts say foreign portfolio investors (FPIs) investing in Indian stock markets due to the possibility of a hike in interest rates by the US central bank, the Russo-Ukraine war, volatility in crude oil prices, high inflation on the domestic front. The flow will remain under pressure.
FPIs had sold the Indian stock markets for six consecutive months till March 2022. During this, he had withdrawn Rs 1.48 lakh crore from the Indian stock markets. The main reason for this was the fear of a hike in interest rates by the Federal Reserve and the situation created by Russia’s attack on Ukraine. After selling for six consecutive months, FPIs had infused Rs 7,707 crore in the first week of April. He then pulled out Rs 4,500 crore from stocks during the week of low trading sessions from April 11 to 13. FPI selling continued in the following week as well.
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According to depository data, during April 1 to 22, foreign investors have withdrawn a net Rs 12,286 crore from Indian markets. Apart from equities, FPIs have also pulled out Rs 1,282 crore from the debt or bond market during the period under review. Himanshu Srivastava, Associate Director-Manager Research, Morningstar India, said, “Anxiety of interest rate hike by the US Federal Reserve is weighing on investor sentiment. In such a situation, investors are once again taking a cautious approach to their investments in emerging markets.” Shrikant Chauhan, Head of Equity Research (Retail), Kotak Securities said that the rise in crude oil prices, high inflation, GDP growth. FPI inflows will remain volatile in the near future due to factors like rate cut. Apart from India, FPIs also pulled out in April from other emerging markets such as Taiwan, South Korea and the Philippines.