Indiscriminate selling of foreign portfolio investors (FPIs) continues in the Indian stock markets. In the first fortnight of May, FPIs have withdrawn Rs 25,200 crore from the Indian markets. Foreign investors are continuously withdrawing their investments from Indian stocks amid rising interest rates globally and rising cases of COVID-19. Foreign portfolio investors were sellers for seven consecutive months till April 2022 and pulled out Rs 1.65 lakh crore from Indian equities.
Adani became a big player in the cement sector by buying Ambuja-ACC
Shrikant Chauhan, Head of Equity Research (Retail), Kotak Securities said, “High crude oil prices, high inflation, tight monetary stance have impacted the stock markets. We expect FPIs to remain volatile in the near future as well. Himanshu Srivastava, Associate Director-Manager Research, Morningstar India said, “Investors are now apprehensive that interest rates may go up further going forward. Because of this, foreign investors are withdrawing from the Indian markets. TradeSmart Chairman Vijay Singhania believes that FPI outflows will continue in the coming weeks as well.
He said that at present, the share of FPIs in Indian stocks has come down to 19.5 per cent, which is the lowest level since March, 2019. After selling for six months in a row, FPIs infused Rs 7,707 crore into the Indian markets in the first week of April. However, after that their withdrawals resumed during the week of short trading sessions from April 11 to 13. Since then he has been a constant seller.
Why FPIs are scared about India
According to depository data, during May 2 to 13, FPIs have withdrawn about Rs 25,216 crore from equities. On May 4, the Reserve Bank had increased the repo rate by 0.4 percent to 4.4 percent without any fixed schedule. Along with this, the central bank had increased the cash reserve ratio (CRR) by 0.50 percent. The US central bank has also increased interest rates by 0.50 percent. Apart from equities, FPIs have also pulled out Rs 4,342 crore from the debt or bond market during this period.
Market watch on inflation data and global trend
April wholesale inflation data, global trends and quarterly results of companies will decide the direction of the stock markets this week. Analysts have expressed this opinion. April’s wholesale inflation data will come on Tuesday. Apart from this, market participants will also watch the trend of Foreign Institutional Investors (FIIs), who have been a seller in the domestic markets for some time now.
Shrikant Chauhan, Head of Equity Research (Retail), Kotak Securities said rising yields on bonds, higher inflation levels and tightening of monetary stance by central banks globally will weigh on the market sentiment in the near future. He said that some stock-specific movements may be seen due to the quarterly results. Quarterly results of Bharti Airtel, DLF, Indian Oil Corporation, ITC, IDFC, JK Tire & Industries and NTPC are due this week.
On the domestic front, he believes, the initial public offering (IPO) of LIC to be listed on May 17 could prove to be a major catalyst.
Capital of eight companies in top 10 decreased by Rs 2.48 lakh crore
Market capitalization of eight of the top 10 Sensex companies declined by Rs 2.48 lakh crore
The market capitalization (market cap) of eight of the top 10 Sensex companies fell by Rs 2,48,372.97 crore last week. During this, Reliance Industries had to bear the maximum loss. Last week, the 30-share BSE Sensex lost 2,041.96 points or 3.72 per cent. Market valuations of Reliance Industries, Tata Consultancy Services (TCS), HDFC Bank, Infosys, ICICI Bank, State Bank of India (SBI), HDFC and Bharti Airtel declined during the week.
On the other hand, the market capitalization of Hindustan Unilever and Kotak Mahindra Bank climbed. The market capitalization of Reliance Industries declined by Rs 1,30,627.7 crore to Rs 16,42,568.98 crore in the week under review. SBI’s market capitalization declined by Rs 35,073.72 crore to Rs 3,97,189.84 crore.
ICICI Bank’s market valuation fell by Rs 29,279.72 crore to Rs 4,70,856.80 crore and Infosys declined Rs 16,869.36 crore to Rs 6,32,432.92 crore. HDFC Bank’s market position declined by Rs 14,427.28 crore to Rs 7,16,641.13 crore and Bharti Airtel’s loss by Rs 11,533.26 crore to Rs 3,78,620.36 crore.