FPIs continue to remain seller, withdraw `7,400 cr from equity markets in July so far

NEW DELHI: Foreign investors continue to be cautious about the Indian equity market and have pulled out over Rs 7,400 crore this month so far amid sustained strengthening of the dollar and increasing concerns over a recession in the US.

This comes following a net withdrawal of Rs 50,203 crore from equities in June.

While foreign portfolio investors (FPIs) have slowed down their pace of selling, this does not indicate a change in trend as there has not been any significant improvement in the underlying drivers, said

Himanshu Srivastava, Associate Director - Manager Research, Morningstar India. There has been an exodus of foreign funds from the Indian equity market over the last nine months.

“Given the uncertainty in the forex market and the sustained strengthening of the dollar, FPIs are unlikely to turn aggressive buyers in the Indian market and at higher levels they may again turn sellers,” said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. Going forward, FPI flows will remain volatile in the emerging markets on account of rising geopolitical risks, rising inflation and tightening of monetary policy by central banks, Shrikant Chouhan, Head - Equity Research (Retail), Kotak Securities, said. According to data with depositories, FPIs pulled out a net amount of Rs 7,432 crore from Indian equities during July 1-15.

While there have been sporadic net inflows by FPIs last week, the broader trend continues to be cautious, Srivastava added. FPIs withdrew a net Rs 50,203 crore from equities in June. This was the highest net outflow since March 2020, when they had pulled out Rs 61,973 crore.