In this month alone, foreign investors have made a net withdrawal of Rs. 15,236 crore due to the appeal of the Chinese markets and worries that the US economy may be ready to face a recession. However, over the past four trading sessions, foreign portfolio investors (FPIs) have switched from sellers to purchasers. Following a net inflow of 11,119 crore in December and 36,239 crore in November, there was an outflow in the month of January.
In total, FPIs withdrew 1.21lakh crore from the Indian equities markets in 2022 because to aggressive rate increases by central banks throughout the world, particularly the US Federal Reserve, erratic oil prices, rising commodity prices, and the conflict in Russia and Ukraine. The worst year for FPIs in terms of flow was 2022, and their exit from the stock market followed three years of net investment.
This month, FPIs have made a net withdrawal of Rs. 15,236 crore, according to information filed with the depositories (till January 20). The aggressive re-opening of the Chinese markets following the lockdown played a significant role in the most recent FPI sell-off. China had been implementing strict lockdowns in compliance with its zero Covid policy to lower the incidence of Covid incidents.
Chinese markets consequently experienced a decline, making them more desirable from a value perspective, according to Hi-manshu Srivastava, Associate Director — Manager Research, Morningstar India. FPIs’ attention shifted as a result from countries like India with relatively high values to China, he continued. Uninspiring US statistics have also contributed to lingering worries about the US economy entering a recession, according to Srivastava.
“Given that the dollar index has been continuously dropping, the sustained selling by FPIs is a little surprising. According to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, the dollar index has fallen from its peak of 114 in 2022 to roughly 103 at the moment. FPIs made substantial purchases only in mining and metals, while they made significant sales in the banking, IT, and telecom sectors. FPIs have sold debt securities worth $1,286 crore so far this month in addition to stocks.