FIIs continue to pull out, sell ₹25K cr in May so far
The relentless selling of Indian stocks by foreign investors continued, as they pulled out a little more than ₹25,200 crore from the Indian equity market in the first fortnight of this month, on a hike in interest rate globally and concerns over rising covid cases.
“Headwinds in terms of higher crude prices, rising inflation and tightening monetary policy weigh on indices. Besides these, investors are worried about growth expectations while inflation remains elevated globally. Hence, we believe FPIs flows are likely to remain volatile in the near-term,” said Shrikant Chouhan, head, equity research (retail), Kotak Securities. Foreign portfolio investors (FPIs) remained net sellers for seven months to April 2022, withdrawing a massive net amount of more than ₹1.65 lakh crore from equities.
FPI selling will continue as heat waves in the market and outside will make investors sweat a bit more, said Vijay Singhania, chairman, TradeSmart. The selling has resulted in FPI’s stake in Indian companies falling to 19.5%, the lowest since March 2019.
After six months of selling spree, FPIs turned net investors in the first week of April due to correction in the markets and invested ₹7,707 crore in equities. However, after a short breather, once again they turned net sellers during the holiday-shortened April 11-13 week, and the sell-off continued in the succeeding weeks as well.
FPI flows continue to remain negative in the month of May till date and have sold around ₹25,216 crore during May 2-13, data with depositories showed.
RBI in an off-cycle monetary policy review on May 4, hiked the policy repo rate by 40 bps and CRR by 50 bps . On similar lines, the US Fed also raised rates by 50 bps on May 4, the biggest hike in two decades.