scorecardresearchFPI outflows cross <span class='webrupee'>₹</span>1 lakh crore in 2022

FPI outflows cross 1 lakh crore in 2022

Updated: 28 Mar 2022, 02:49 PM IST
TL;DR.

Just this month, they have sold domestic equities worth 48,261.7 crore, remaining net sellers for the sixth consecutive month since October last year.

Just this month, they have sold domestic equities worth  <span class='webrupee'>₹</span>48,261.7 crore, remaining net sellers for the sixth consecutive month since October last year.

Just this month, they have sold domestic equities worth 48,261.7 crore, remaining net sellers for the sixth consecutive month since October last year.

Foreign investors have withdrawn worth 1.15 lakh crore from the Indian markets in 2022 so far, which is a record high for any calendar year amid increased geopolitical tensions between Russia and Ukraine and its resulting inflationary concerns. Just this month, they have sold domestic equities worth 48,261.7 crore, remaining net sellers for the sixth consecutive month since October last year.

This was the highest ever since March 2020, when the Indian markets witnessed a massive sell-off due to COVID. In March 2020, outflows by foreign investors in Indian equities stood at 61,973 crore.

As per data, foreign investors pulled out 33,303 crore from Indian equities in January and 38,068.02 crore in February.

For FY22, they have withdrawn worth 1.40 lakh crore, which is again the highest ever outflow in a financial year to date. Before this, the highest overall net outflow by foreign investors was witnessed in 2008-09 at 45,811 crore followed by FPI outflows in FY19 at 38,930 crore and then FY20 at 27,528 crore.

This recent round of exodus of foreign investors is largely driven by inflationary pressures and worsening global conditions following the Russia-Ukraine war. According to experts, Foreign investors remain cautious that India will be impacted heavily by the surge in commodity price, especially crude oil. Further rise in commodity prices will not only impact macro numbers but also the corporate earnings estimates, they added.

Experts believe that it will take some time for the foreign investors to return back to India, at least till the uncertainty surrounding Russia and Ukraine are not over. Further, the corporate earnings also remain at risk as the rise in crude oil prices will adversely impact raw material costs across sectors and hence the companies may face margin pressure in the coming quarters.

However, even though the foreign investors seem to have lost confidence in Indian equities, the domestic investors and mutual funds have been consistently infusing funds in Indian equities countering some of the negative impacts due to the foreign outflows.

 

Article
Foreign portfolio investors (FPIs) have been on a selling spree in the Indian market, exceeding the global financial crisis (GFC) outflow of 2008-09. However, the market benchmark Sensex has not reacted to the FPI selling as it used to in the past. Data from NSDL show that FPIs have sold equities worth 1,41,507 crore in the Indian equities in the financial year 2022 (FY22) so far. Cumulatively, they have withdrawn 1,19,950 crore from the Indian financial market instruments, which includes equities, debt, debt-VRR (voluntary retention route) and hybrid category. The data show, FPIs have sold only equities and bought in debt, debt-VRR and hybrid categories in FY22 so far.
First Published: 28 Mar 2022, 02:49 PM IST