FPIs net selling in Indian equity markets stood at Rs52987 crore in June

4 Jul 2022 , 08:31 AM

Foreign investors continued their relentless selling spree for the ninth month in a row in June, selling Indian shares worth Rs50,203 crore – the highest net outflow in more than two years – as a result of the US Federal Reserve’s aggressive rate hike, high inflation, and the relatively higher valuation of domestic equities.

The first half of 2022 saw foreign portfolio investors’ greatest net withdrawal from domestic stocks (FPIs), totalling almost Rs2.2 lakh crore. Prior to that, statistics from depositories showed that FPIs withdrew Rs52,987 crore over the entire 2008 year.

The significant capital flight has also led to the weakening of the rupee, which last week for the first time crossed the 79-mark versus the US dollar. FPI flows are likely to remain unstable in the near future, analysts warn.

The general attitude toward India remained unfavorable, which led international investors to maintain their cautious approach to domestic equities. India is among the worst affected emerging markets in terms of net outflows.

FPI selling started to decline by the end of June. FPIs might resell if the market increases in July as a consequence of or in anticipation of positive first-quarter results. Only until the currency stabilizes and US bond yields fall will this trend come to an end.

FPI flows were negative in other emerging markets as well, such as Indonesia, the Philippines, South Korea, Taiwan, and Thailand, in June.