BackFPIs emerge as net sellers in first week of May, pull out ₹6,417 cr in equity markets
From May 2 to May 6, foreign investors pulled out ₹6,417 crore in the equity market, data given by NSDL showed. So far this year, FPIs have only been net sellers in the equities. In April 2022, FPIs outflow stood at ₹17,144 crore in this market.
PremiumForeign portfolio investors (FPIs) emerged as net sellers in the first week of May with a steep selloff in the equities market as globally inflation worries, monetary policy tightening, and the uncertainties over the Russia-Ukraine war has continued to turmoil sentiments leading to volatility.
From May 2 to May 6, foreign investors pulled out ₹6,417 crore in the equity market, data given by NSDL showed. So far this year, FPIs have only been net sellers in the equities. In April 2022, FPIs outflow stood at ₹17,144 crore in this market.
FPIs outflow in the equity market was at ₹41,123 crore in March 2022, while it was at ₹35,592 crore in February and ₹33,303 crore in January this year.
Meanwhile, FPIs were sellers in the debt market with an outflow of ₹1,085 crore from May 2-6, while a slight selling of ₹9 crore was recorded in the hybrid market. On the other hand, the debt-VRR market witnessed an inflow of ₹767 crore during the first week of May.
Overall, so far in May, the FPI outflow in the Indian market (including equity, debt, debt-VRR, and hybrid) stood at ₹6,745 crore.
It will be keenly watched if further weeks in May will witness the easing of bears. The year 2022 has so been volatile with FPIs being net sellers.
In April 2022, overall, FPIs pulled out ₹22,688 crore, this is still lower compared to the outflow of ₹50,068 crore in March. The outflow was at ₹38,068 crore and ₹28,526 crore in February and January this year.
In India, last week, markets were shocked by the sudden surprise of RBI's hike of 40 basis points in repo rate to 4.4%. It was sooner than expected, hinting toward the severity of soaring inflation and further creating concern about the economy's growth revival that was hit due to the pandemic. RBI moves toward ensuring sufficient liquidity. RBI's policy approach is seen to be tilting towards a hawkish stance amidst inflationary pressure like the other central banks globally. US Federal Reserves and the Bank of England have also raised their key rates to tackle raging inflation.
Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, "Since markets have turned very weak globally FPIs may continue to sell perhaps with reduced volume. Even after the recent correction in the market, valuations are not cheap. Perhaps, if Nifty corrects another 5% from the current levels, FPIs are likely to turn buyers. With aggressive Fed tightening, lockdowns in China, and the Ukraine war lingering the situation is not favorable for a sharp turnaround in markets"
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