The outflow of foreign funds from Indian equities markets has continued apace, with FPIs withdrawing over Rs 35,000 crore so far this month on fears of a more aggressive rate hike by the US Federal Reserve and a strengthening of the dollar.
So far in 2022, net outflows from equities by Foreign Portfolio Investors (FPIs) have totaled Rs 1.63 lakh billion.
According to Shrikant Chouhan, Head - Equity Research (Retail), Kotak Securities, FPIs flow in India will remain volatile in the short term due to headwinds such as elevated petroleum prices, inflation, and tight monetary policy, among others.
FPIs are expected to continue selling in the near term because the mother market, the US, is weak and the currency is strengthening," V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.
For the seven months leading up to April 2022, foreign investors were net sellers, removing a staggering net amount of approximately Rs 1.65 lakh crore from equities. Following a six-month selling run, FPIs became net investors in the first week of April when markets corrected, investing Rs 7,707 crore in shares.
After a little respite, they turned net sellers again during the holiday-shortened April 11-13 week, and the sell-off persisted in the weeks that followed. FPI flows have been negative in May so far, with shares worth Rs 35,137 crore dumped between May 2 and 20, according to depositories' data.