FPIs start the month of July as net sellers and withdraw Rs 811 Crore from the market on the first day

Foreign Portfolio Investors (FPI) started the month of July as net sellers as they withdrew a total of around 811 crore from the Indian market on the first day. For the most of this year, FPIs have had a selling bias on the Indian capital markets.

According to NSDL statistics, FPIs evacuated 811 crore on July 1, 2022, with significant outflows in the equity and debt-VRR markets.

FPI outflow totaled 261 crore in the equities market and ₹372 crore in the debt-VRR sector, respectively. In the meantime, the debt market saw an ₹186 crore outflow. This was not the case, though, with FPIs investing $8 crore in the hybrid market on Friday.

Global market conditions, including geopolitical unrest, higher prices for crude oil and other commodities, pandemic developments, multi-year high inflation, and aggressive monetary policy tightening, dampened investor sentiment as worries about a potential recession and slowdown in economic growth spread, making FPIs less interested in capital markets.

Therefore, these market spillovers, including the outflow of foreign funds, came after macroeconomic threats. When it comes to domestic investors, June witnessed the greatest amount of money leaving the market.

The greatest monthly selloff in the Indian market so far in 2022 occurred in June, when the outflow totaled 51,422 crore. The outflow in April and May was around ₹36,518 crore and ₹22,688 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.

The total FPI outflow in the domestic market for the first quarter of FY23 (April to June 2022) was ₹110,628 million, down from ₹1,16,662 million the previous quarter (January – March 2022).

From January to June of this year, or the first half of 2022, FPIs withdrew a staggering ₹2,27,290 crore from the Indian market.

As of July 1, 2022, the total amount of FPI outflow in the market is close to ₹2,28,101 crore. The debt market had an outflow of ₹15,056 crore, while the stocks market was the hardest hit, losing ₹2,17,619 crore. Investments of ₹2,712 crore and ₹1,862 crore have been made in the debt-VRR and hybrid markets thus far this year, respectively.

Equity, debt, debt-VRR, and hybrid market are all included in the aforementioned data.