Foreign portfolio investors (FPIs) sold Indian shares worth USD6.44 billion in June, the second-highest monthly outflows ever, amid macroeconomic and fundamental worries on the local and international fronts. Only the net outflows in March 2020 of USD8.4 billion were lower than the outflows in June.
But more importantly, since October 2021, foreign investors have sold shares worth a total of USD33.6 billion, recording net sales for the past nine months.
In fact, since the Global Financial Crisis of 2008, when these investors were net sellers for seven months beginning in May, this is the longest selling streak by FPIs. Comparing the cumulative net selling to the most recent selling period, it was substantially lower at USD9.71 billion.
Although the ongoing correction has sent the Indian benchmarks down over 15% from their all-time highs reached in October last year, market observers attribute the selling to a variety of factors, including tightening monetary policy by central bankers globally and high valuations.
According to a recent analysis from ICICI Securities, "Large scale outflows from Indian stocks by FPIs has been mostly driven by the fear of aggressive quantitative tightening by the US central bank to manage inflation and relatively higher valuations of Indian shares."