Foreign Portfolio Investors (FPIs) continue to desert Indian equity markets and have pulled out over Rs 4,000 crore in July so far amid steady appreciation of the dollar and rising interest rates in the US.
However, over the past few weeks, foreign portfolio investors have been selling at a slower rate.
"Oil prices surpassing the USD100 per barrel level and refining margins thinning across markets contributed to an uptick in market mood. The RBI's action to stop the rupee from falling further strengthened the bullish trend "said TradeSmart Chairman Vijay Singhania.
However, according to Himanshu Srivastava, Associate Director - Manager Research, Morningstar India, the slowing of net withdrawals by FPIs does not indicate a shift in the pattern because the underlying factors have not much improved.
For the past nine months, FPIs have been in a selling phase. He said, "There will also be a prospect of central banks turning soft on the planned rate hikes, which again will put the risk assets back into the equation." If the "high inflation story takes a back seat," he said.
Data from depositories show that between July 1 and July 8, FPIs withdrew a net total of Rs 4,096 crore from the Indian equity market. However, on July 6, FPIs purchased stocks worth more than Rs 2,100 crore for the first time in a number of weeks.
FPIs sold Indian shares worth USD 6.44 billion in June
