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FPIs begin July as net sellers, remove Rs811 cr from Indian market on first day

03 Jul , 2022   By : Kanchan Joshi

FPIs begin July as net sellers, remove Rs811 cr from Indian market on first day

Foreign Portfolio Investors (FPI) commenced July as net sellers as they pulled out somewhat Rs811 crore cumulatively from the Indian market on the first day of the month. FPIs have held a selling bias on Indian capital markets throughout this year so far.

FPIs removed Rs811 crore on July 1, 2022, with massive outflow recorded in the equities and debt-VRR market, as per NSDL data.

From the total, FPIs outflow stood at Rs261 crore in the equity market, while the selloff was at Rs372 crore in Debt-VRR market. Meanwhile, the debt market also recorded an outflow of Rs186 crore. However, this was not the case with the hybrid market as FPIs invested Rs8 crore in this basket on Friday.

Due to the tone of a highly bearish market globally amidst geopolitical tension, higher crude oil prices and other commodities, developments in the pandemic, multi-year high inflation, and aggressive monetary policy tightening led to dampening of investors' sentiments as fears of possible recession and slowdown in economic growth take round - leading FPIs to lose appetite for capital markets.

Thereby, following macroeconomic risks, these were market spill overs including foreign funds outflow. On the domestic front, June saw the most money going out of the market in the case of overseas investors.

In June, the outflow stood at Rs51,422 crore - the highest monthly selloff in the Indian market so far in 2022. In April and May, the outflow was around Rs36,518 crore and Rs22,688 crore.

Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, "FPIs are selling more in countries with rising current account deficits ( CAD) like India because the currencies of such countries are vulnerable to further depreciation. Towards the end of June, FPI selling has been showing a declining trend."

"If the market rises in July anticipating or responding to good Q1 results, FPIs may again sell. This trend will be halted only when the dollar stabilises and US bond yields decline," Vijayakumar added.

During the first quarter of FY23 (April - June 2022), the overall FPI outflow in the domestic stood at Rs1,10,628 crore - compared to the outflow of Rs1,16,662 crore seen in the previous quarter (January - March 2022).

In the first half of 2022 (January - June this year), FPIs removed money to the tune of a whopping Rs2,27,290 crore from the Indian market.

Overall, so far in 2022, as of July 1, FPIs outflow in the market is around Rs2,28,101 crore. The equities market was the worst hit with an outflow of Rs2,17,619 crore, while the debt market saw an outflow of Rs15,056 crore. Both debt-VRR and hybrid market witnessed an investment of Rs2,712 crore and Rs1,862 crore so far this year.

The above data includes equity, debt, debt-VRR, and hybrid market.

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