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Thursday, July 7, 2022

FPI investors are selling continuously, 14,000 crore withdrawn so far, know what is the reason?

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FPI: Foreign investors are continuously withdrawing money from the Indian market, due to which the domestic market is also witnessing a decline. Due to the reactions taking place on the global front, the process of selling of foreign portfolio investors is continuing.

14,000 crore withdrawn
FPIs have withdrawn Rs 14,000 crore from Indian markets so far this month. According to depository data, FPIs have so far withdrawn Rs 1.81 lakh crore from the Indian stock markets this year.

Selling will continue even further
Vinod Nair, Head of Research, Geojit Financial Services, said FPI selling will continue going forward. However, in the short and medium term there may be some selling.

Know what is the reason?
“This is because the market has already ‘accepted’ the slowdown in the economy, tight monetary stance, supply side problems and high inflation,” Nair said. In the long term, aggressive monetary stance by central banks will continue only when inflation is high.

Selling continues since October
According to the data, FPIs have made a net withdrawal of Rs 13,888 crore from the Indian stock markets during June 1 to 10. Their sell-off continues from October, 2021. Nair said that due to the aggressive stance of the Federal Reserve, the selling of FPIs is going on for the time being.

Withdrawal from loan market
During the period under review, FPIs have pulled out Rs 600 crore from the debt or bond market, apart from equities. Himanshu Srivastava, Associate Director-Manager Research, Morningstar India, said that from a risk perspective, rising interest rates in the US have made the Indian bond market no longer an attractive investment option for foreign investors.

Withdrawals from many other markets as well
Apart from India, FPIs have also pulled out from emerging markets such as Taiwan, South Korea, Thailand and the Philippines during the period under review.

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