The drain of funds from foreign portfolio investors (FPIs) into the Indian market is slowing down. The new pattern since the beginning of July demonstrates that foreign investors are tired of selling. Due to the strong dollar, higher commodity prices, inflationary pressures, geopolitical unrest, and rising interest rates, FPIs have only been net sellers in the market thus far this year.
However, the most recent rebound in domestic equities and a respite from worries about macroeconomic risks suggest that FPIs' selling activity may be reaching its top and becoming optimistic. But a lot will rely on how the rupee fares in the future. If the Indian rupee consolidates at its current level, FPI selling is anticipated to decrease.
FPIs have withdrawn Rs. 4,418 crores from the Indian market so far in July. When compared to the prior week, the selloff is slower. A total of 4,096 crores were withdrawn out of the equity market this month, while just 7 crores were taken out of the hybrid market and 844 crores were pulled out of the debt-VRR market. With an influx of 529 crores so far this month, the debt market has experienced a buying mood.
FPI selling pressure in the first six months of the year
FPIs withdrew a sizable sum totalling 1,10,628 crore from the Indian market during the April to June 2022 quarter. With a total outflow of 51,422 crores, June is the worst-affected month so far this year. In comparison, May and April saw outflows of 36,518 crores and 22,688 crores, respectively.
FPIs withdrew $ 2,27,290 crore from the market in the first six months of 2022. The total outflow in the Indian market this year is at $2,31,708 crore. Equities suffered the most, as money to the tune of 2,21,454 crore left the market, making up 95.57 per cent of all outflows. Only 14,341 crores were taken out of the debt market by FPIs. However, they were net purchasers in the debt-VRR and hybrid markets, bringing in respectively 2,240 crores and 1,847 crores.
