INSUBCONTINENT EXCLUSIVE:
Foreign portfolio investors (FPIs) have pulled out Rs 1.22 trillion ($16.58 billion) from the Indian stock market so far this year and are
on course to hit the highest-ever outflows in a calendar year.FPIs have turned net sellers in 2022 after being net buyers in the last three
A combination of factors such as interest rate hikes by major central banks, weakness in the rupee, fears of global recession, and a spike
in commodity prices have led to continuous pullout by overseas investors from domestic stocks.
The rate hikes and monetary tightening by
central banks, including the US Federal Reserve, led to risk aversion among investors, who were sceptical about whether policymakers would
be able to tame inflation without triggering a recession
The depreciation of the rupee added to the nervousness of foreign investors
On a year-to-date basis, the rupee has declined 10.2 per cent against the US dollar
beginning of the year amid tightening by the Fed
Supply disruptions caused by the Russia-Ukraine war led to a rise in commodity prices
Brent crude prices first surged to about $134 per barrel in March, but later corrected and are now hovering around $80 per barrel.
But
despite the heavy FPI selling, the Sensex has managed a YTD gain of 4.8 per cent on the back of strong domestic flows
However, even with our conservative estimates, just provident funds, pension funds, insurance funds, and SIPs could contribute at least $20
report.
Going forward, analysts said sustained FPI outflows could incrementally put pressure on the markets
well relative to its peers
In that respect, India has been used as a source of funds whenever there was redemption by emerging markets funds
And that will probably be the case next year
If emerging markets do well on the back of stabilising interest rates globally, markets like China, Korea and other emerging markets will
Bhat, co-founder of Alphaniti Fintech, said interest rates in the US were likely to peak at 5 per cent
