A maneuver by American banks in the midst of the Russia-Ukraine war proved to be a headache for foreign portfolio investors (FPIs). But India’s stock market has to bear the brunt of their confusion. Foreign investors withdrew 45 hundred crores from the stock markets amid fears of a hike in interest rates by the US Central Bank Federal Reserve. His move is a big blow for India.
FPIs had earlier invested Rs 7,707 crore in the Indian market from April 1 to 8. At that time, due to the correction in the market, FPIs got a good buying opportunity. However, before this, during the six months till March 2022, FPIs had withdrawn a huge amount of Rs 1.48 lakh crore from the stock market. The main reason for this was the possibility of a rate hike by the US Federal Reserve and Russia’s military attack on Ukraine.
According to depository data, FPIs pulled out Rs 4,518 crore from Indian stock markets during the short holiday trading week on April 11-13. While Thursday was the birth anniversary of Babasaheb Dr. Ambedkar, the stock markets were closed on Friday due to Good Friday. However, the Indian market expects FPIs to come back to India in a big way once the Ukraine crisis subsides.
Morningstar India Associate Director-Manager Research Himanshu Srivastava said FPIs have taken a cautious approach to their investments in emerging markets like India due to the possibility of the US central bank raising interest rates. Last week, FPIs pulled out Rs 415 crore from the debt or bond market. Last week, he had injected Rs 1,403 crore into the bond market. He says that the selling of FPIs is in line with the fall in global markets.