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FPI selloff remains slow in July with 7,432 cr outflow from equities. Is this a sign of revival?

FPIs have stayed net sellers since the start of 2022 due to turmoil in macroeconomic activities. (REUTERS)Premium
FPIs have stayed net sellers since the start of 2022 due to turmoil in macroeconomic activities. (REUTERS)

  • From July 1-15, FPIs outflow in the equity market stood at 7,432 crore, as per the NSDL data. This shows the exhaustion of the foreign funds' outflow compared to the selloff of 31,430 crore in the equity market recorded from June 1-18.

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Foreign portfolio investors (FPIs) continue to be sellers so far in July, however, the outflow of money in the equity market is at a slower pace compared to the previous month. More than two weeks have passed in the current month, and FPIs outflow has not even breached over 10,000 crore - which brings in the hope that finally there might be a revival in foreign funds outflow in the stock market in the near term. FPIs have stayed net sellers since the start of 2022 due to turmoil in macroeconomic activities.

From July 1-15, FPIs outflow in the equity market stood at 7,432 crore, as per the NSDL data. This shows the exhaustion of the foreign funds' outflow compared to the selloff of 31,430 crore in the equity market recorded from June 1-18.

Overall, in June, 50,203 crore was removed from the equity market - the highest monthly outflow in 2022.

From April - June 2020 period, FPIs outflow is to the tune of 1,07,340 crore in the Indian equities. In the first half of 2022 (January - June), the outflow is around 2,17,358 crore from the market.

So far this year, FPIs have removed a whopping 2,24,790 crore - which accounts for about 95% of the total outflow in the overall Indian market. The foreign funds' outflow is about 2,36,672 crore in the Indian market including equities, debt, debt-VRR, and hybrid.

On Friday, Sensex closed at 53,760.78 up by 53,760.78 points or 0.65%. Nifty 50 settled at 16,049.20 higher by 110.55 points or 0.69%.

Vinod Nair, Head of Research at Geojit Financial Services said, "Volatility has re-emerged and investors have turned their focus on upcoming Fed policy in the backdrop of heightened US inflation. Fall in crude prices and reduction in FII selling added optimism to the domestic market while gloomy IT results, depreciating rupee, and fear of global recession are restricting sizeable up move. In addition to the Fed policy, the domestic market's near-term momentum will be influenced by ongoing quarterly earnings."

Currently, FPIs keep a close watch on the Indian rupee which seems to not rest from its depreciation against the US dollar. The local unit has inched closer to the 80 mark.

The rupee weakened for the eleventh week in a row and closed at 79.8775 against the dollar on Friday as fear of global recession escalates as investors await the Fed meeting. Earlier, in the day, the local currency touched a record low of 79.96. The rupee has hit an all-time low for the fifth straight session.

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