FPIs have withdrawn Rs 15,236 crore this month (till January 20). The main reason for the sale of FPIs is the aggressive reopening of markets in China (Corona lockdown) after the lockdown.
FPIs withdraw:
Foreign portfolio investors (FPIs) have sold a net amount of Rs 15,236 crore from the Indian stock market so far in January amid growing attractiveness in Chinese markets and concerns that the US economy is going into recession.
However, it is a matter of relief that foreign investors have bought in the last 4 trading sessions. Earlier in December 2022, FPIs had bought Rs 11,119 crore in the stock markets and Rs 36,239 crore in November.
Reasons for selling in January:
According to depositories data, FPIs have made a net outflow of Rs 15,236 crore this month (till January 20). The main reason for the sale of FPIs is the aggressive reopening of markets in China (Corona lockdown) after the lockdown.
China is attracting foreign investors:
Himanshu Srivastava, associate director-manager research at Morningstar India, said that due to the zero Covid policy, China imposed a strict lockdown. Due to this, there was a huge decline in China's markets. In such a situation, investing there in terms of value has become more attractive.
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He said that because of this, FPIs are withdrawing from high-valuation markets like India. Himanshu Srivastava said that apart from this, the concern of the US economy going into recession remains constant, which has been further supported by the disappointing figures of america.
Sharp fall in dollar index:
V K Vijayakumar, chief investment strategist at Geojit Financial Services, said the continued selling by FPIs is a bit surprising as the dollar index continues to decline. The dollar index has dropped from a peak of 114 in 2022 to around 103 now. The falling dollar is favourable for emerging markets and hence India should have received investment.
FPIs keep an eye on these markets
What is happening is that FPIs are investing heavily in cheap markets like China, Hong Kong, South Korea and Thailand. They are selling in a relatively expensive market India. Apart from stocks, foreign portfolio investors (FPIs) have also sold shares worth Rs 1,286 crore from the debt or bond market this month.
The reason for the sale of FPIs?
Foreign investors sold shares worth Rs 1.21 lakh crore from Indian stock markets in 2022, largely due to aggressive interest rate hikes by central banks globally.
This is especially due to fluctuations in crude oil prices by the US Federal Reserve (US Fed), a sharp jump in bullion prices amid the Russo-Ukraine War. 2022 has been the worst year for FPIs to invest. In 2022, he sold shares fiercely, while during the last 3 years he had withdrawn net investment (FPIs) in shares.