FPIs withdraw Rs 41,000 cr in March
Published On: Sunday, April 3, 2022 | By: Team KnowMyStock
Foreign investors pulled out a massive ₹41,000 crore from the Indian equity market in March in anticipation of rate hikes by the US Federal Reserve and the deteriorating geopolitical environment amid the Russia-Ukraine war, continuing their selling spree for the sixth consecutive month. Flows from foreign portfolio investors (FPIs) are expected to remain volatile in the near term given the headwinds in terms of elevated crude prices and inflation, experts said. According to data available with the depositories, FPIs were net sellers to the tune of ₹41,123 crores in the equity market last month. This was way higher than net withdrawals of ₹35,592 crore in February and ₹33,303 crore in January.
Cyclically, this is the first time we have noticed a prolonged inverse correlation between FPI flows and Nifty, he added.
Apart from equities, the debt market saw net outflows to the tune of ₹5,632 crore in March.
Equity markets were strong globally, while commodities witnessed some correction from elevated levels.
"However, given the headwinds in terms of elevated crude prices, inflation, etc FPI flows are expected to remain volatile in the near term," experts say.
Apart from India, other emerging markets such as Taiwan, South Korea and the Philippines too witnessed FPI outflows in March.
Recently, the US Fed increased policy rate for the first time since 2018, by a quarter percentage point, thus finally ending its ultra-easy pandemic-era monetary policy and indicating more rate hikes this year.
The war between Russia and Ukraine too continues. Therefore, under the given fast-changing global landscape, foreign flows into Indian equities could shift either way depending on how the underlying scenario changes, said an expert.
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