In the last financial year 2021-22, there has been a withdrawal of Rs 315 crore from sustainable funds.
FPI: Foreign portfolio investors (FPIs) are losing confidence amid fears of a hike in interest rates by the US central bank Federal Reserve. Foreign investors have pulled out Rs 12,300 crore from Indian markets so far this month. Analysts say that FPI investments may remain under pressure due to fears of a hike in interest rates by the US central bank, the Russo-Ukraine war, volatility in crude oil prices and high inflation.
FPIs had sold the Indian stock markets for six consecutive months till March 2022. During this, he had withdrawn Rs 1.48 lakh crore from the Indian stock markets. The main reason for this was the fear of a hike in interest rates by the Federal Reserve and the situation created by Russia’s attack on Ukraine. After selling for six consecutive months, FPIs had infused Rs 7,707 crore into the shares in the first week of April. After this, during the week of low trading sessions from April 11 to 13, he pulled out Rs 4,500 crore from the shares. FPI selling continued in the following week as well.
What do experts say
- According to depository data, during April 1 to 22, foreign investors have withdrawn a net Rs 12,286 crore from the Indian markets. In addition to shares, FPIs have also withdrawn Rs 1,282 crore from the debt or bond market during this period.
- Himanshu Srivastava, Associate Director-Manager Research, Morningstar India, said, “Anxiety of interest rate hike by the US Federal Reserve is affecting investor sentiment. In such a situation, investors are once again taking a cautious approach about their investments in emerging markets.
- Shrikant Chauhan, Head of Equity Research (Retail), Kotak Securities said that due to high crude oil prices, high inflation, slowdown in GDP growth, there will be volatility in FPI inflows in the short term. Apart from India, FPIs have also pulled out from other emerging markets such as Taiwan, South Korea and the Philippines in April.
Withdrawal of Rs 315 crore from sustainable funds
In the last financial year 2021-22, there has been a withdrawal of Rs 315 crore from sustainable funds. Earlier in the financial year 2020-21, an investment of Rs 4,884 crore came in these funds. According to data compiled by Morningstar India, more than Rs 2,000 crore was invested in sustainable funds before 2020-21. Going forward, ESG funds (environmental, social and governance) will be an important part of the overall investing framework of asset managers in India, say experts.