In the current year so far, FPIs have withdrawn funds worth ₹1.22 trillion ($16.58 billion) from the Indian equity market and are on track to hit the highest-ever outflows in a calendar year, Business Standard reported.
Factors including interest rate hikes by major central banks, weakness in the rupee, fears of a global recession and a spike in commodity prices are to be blamed for a continuous pullout by overseas investors from domestic stocks, the report said.
In July, FPIs turned net buyers after nine straight months of massive net outflows, which started in October last year. Between October 2021 and June 2022, they pulled out a massive ₹2.46 lakh crore from the Indian equity markets, according to media reports.
After FPIs made a U-turn in July by investing nearly ₹5,600 crore, the Nifty rallied 8.60 percent and the Sensex gained 8.56 percent. The Indian market outperformed most of its global peers that month.
Similarly, the Nifty delivered a 3.50 percent return and the Sensex gained 3.42 percent in August after FPIs infused nearly ₹51,000 crore.
In the following September and October months, FPIs pulled out ₹7,624 crore and ₹8 crore. However, they made a strong comeback in November by investing a total of ₹36,329 crore on expectations that the US Fed may be less aggressive on rate hikes soon.
Continuing the same momentum, FPIs have infused a net ₹10,555 crore in Indian equities so far in December amid stabilisation in oil prices and moderating US inflation, as reported by PTI, quoting depositories' data.
But despite the heavy FPI selling, the Sensex has managed a YTD gain of 4.8 percent on the back of strong domestic flows.
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