scorecardresearchFPI sell-off Continues; pull out ₹35,000 crore in May so far: Report

FPI sell-off Continues; pull out 35,000 crore in May so far: Report

Updated: 31 May 2022, 11:14 AM IST
TL;DR.
Apart from India, other emerging markets, including Taiwan, South Korea, Indonesia, and the Philippines, have also witnessed outflows in the month of May till date.
Goldman Sachs anticipated that FPI flows into India may remain weak in 2022.

Goldman Sachs anticipated that FPI flows into India may remain weak in 2022.

Foreign investors net sold Indian equities worth over $4.6 billion ( 35,000 crore) in May so far—the highest in emerging markets—amid rising bond yields in the US, an appreciating dollar and prospects of a more aggressive rate hikes by the Federal Reserve, ET reported.

Only on the stock exchanges, overseas investors pulled over 41,000 crore out of local stocks - the highest in a month since March 2020 - when they sold shares worth 57,000 crore amid the pandemic led lockdown.

Following the selling in May, the net outflow from the secondary market rose to 1.73 lakh crore so far in 2022 as against purchases of 6,570 crore in the primary market.

In 2021, Foreign Portfolio Investors (FPIs) sold shares worth 54,542 crore in the secondary market but pumped in 80,310 crore in the primary market.

Analysts believe that flows from FPIs are expected to remain volatile in the near term.

Apart from India, other emerging markets, including Taiwan, South Korea, Indonesia, and the Philippines, have also witnessed outflows in the month of May till date.

According to a study by Bank of America Securities India, the FPI's ownership was at 21.2 per cent in March 2021, the second-highest on record.

Foreign funds’ ownership in the domestic equities was at 18.6 per cent in December 2017, the lowest in five years, and the peak was in December 2021, when they owned 21.4 per cent of domestic equities.

Meanwhile, the record outflows of $26 billion ( 201,500 crore), by foreign portfolio investors since October 2021, have made it the biggest sell-off in the history of the Indian Capital Market. However, domestic investors (DIIs), led by mutual funds, pumped $ 31 billion ( 240,250 crore) during the period, according to media reports.

The outflows due to sustained selling by FPIs in the last seven and a half months have even overtaken the previous record sell-off by FPIs when 116,250 crore, or $ 15 billion at the current exchange rate, was pulled out during the global financial crisis between January 2008 and March 2009.

In a note dated March 31, Goldman Sachs anticipated that FPI flows into India may remain weak in 2022. It forecasts $5 billion in foreign portfolio investment into India in 2022, down from its previous prediction of $30 billion, with risks skewed to the downside.

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First Published: 31 May 2022, 11:14 AM IST