After the US Federal Reserve signalled an interest rate hike in January, foreign portfolio investors withdrew Rs 28,243 crore from Indian stocks.
- Two thousand two hundred ten crores were invested in debt, while 1,696 crores were invested in hybrid instruments.
- FPIs have been booking profits in IT, where they have been sitting on large profits following the massive rise in the last two years,” V K Vijayakumar says.
As the US Federal Reserve announced a rate hike, foreign portfolio investors (FPIs) pulled out a massive Rs 28,243 crore from Indian equities in January. FPIs withdrew 28,243 crores from equities between January 3 and January 28, according to depositories data.
They invested 2,210 crores in debt and 1,696 crores in hybrid instruments within the same period. The net outflow totalled Rs 24,337 crore. Â FPIs have been net sellers for the fourth month in a row due to the recent withdrawal of funds from Indian markets.
“FPIs went on a selling frenzy in the Indian equities markets after the US Fed signalled that it will start raising interest rates soon and cut its bond holdings,” said Himanshu Srivastava, Associate Director – Manager Research, Morningstar India.
This signals that the period of ultra-easy monetary policy is drawing to a close.
“FPIs have been booking profits in IT,” said V K Vijayakumar, chief investment strategist at Geojit Financial Services.
He added that financial stock values, particularly those of prominent banks, weakened due to FPI selling.
Furthermore, bond yields have risen globally in recent months in anticipation of a rate hike by the US Federal Reserve, making investors risk cautious and leading them to reduce their exposure to risky assets and shift to safe havens such as gold, according to Mr Srivastava.
Given their conservative approach towards Indian equities, FPIs may be parking their investments in the Indian debt market for the short term. Other emerging markets, such as South Korea, Taiwan, and the Philippines, saw negative flows of $2.77 billion, $2.5 billion, and $56 million, respectively.
In comparison, Thailand and Indonesia saw inflows of $442 million and $418 million, respectively, according to Shrikant Chouhan, Kotak Securities’ Head of Equity Research (Retail).Â
Mr Chouhan believes that the central bank’s desire to combat excessive inflation, as well as the Fed’s start of asset reduction after raising borrowing costs, would keep equities markets turbulent.
Published By – Vanshu Mehra
Edited By – Subbuthai Padma
