Foreign portfolio investors: The process of withdrawal of foreign portfolio investors (FPIs) from the Indian stock markets continues in July as well. However, now the pace of selling of FPIs has slowed down a bit. FPIs sold shares worth over Rs 4,000 crore in July amid a firming dollar and hike in interest rates in the US.
Market sentiment improves
TradeSmart Chairman Vijay Singhania said market sentiment has improved on expectations of moderation in inflation amid fall in crude oil prices. The sentiment has also improved with the Reserve Bank’s efforts to arrest the fall in the rupee.
Selling since last 9 months
Himanshu Srivastava, associate director-manager research, Morningstar India, believes that lower net outflows of FPIs do not mean any major change in stance. There has been no significant improvement in the reasons for which FPIs were withdrawing, he said. FPIs have remained sellers for the last nine consecutive months.
Know what is the opinion of experts?
Hitesh Jain, Principal Analyst-International Shares, Yes Securities, said that FPI inflows will resume after there is a clear indication of inflation coming down from higher levels. He said that if things turn out to be correct on the high inflation, it is possible that the central bank will be soft on the interest rate front. This will once again increase investment in riskier assets.
How much was sold between July 1 and 8?
According to depository data, FPIs have pulled out a net Rs 4,096 crore from Indian stock exchanges during July 1-8. However, for the first time in the last several weeks, on July 6, such an opportunity came when FPIs bought Rs 2,100 crore.
50,203 crore shares were sold in June
In June, FPIs sold shares worth Rs 50,203 crore. This is the highest level since March 2020. At that time, FPI withdrawals stood at Rs 61,973 crore. This year FPIs have withdrawn Rs 2.21 lakh crore from Indian stocks. Earlier, in the full year of 2008, he had withdrawn Rs 52,987 crore. Rupee has also weakened due to FPI withdrawals. Recently the rupee crossed the level of 79 per dollar.