Foreign portfolio investors (FPIs) have withdrawn a net Rs 14,935 crore from the Indian market in the first half of February. FPIs have been net sellers for the fourth consecutive month. The total net outflow during February 1-11 stood at Rs 14,935 crore. As per data from depositories, FPIs took out Rs 10,080 crore from equities, Rs 4,830 crore from the debt segment and Rs 24 crore from hybrid instruments.
“FPIs sharply increased the pace of selling after the US Federal Reserve indicated an end of the ultra-loose monetary policy regime. Besides, globally, the bond yields have surged in recent times on expectation of a hike in interest rates by the US Fed,” Himanshu Srivastava, associate director (manager research) of Morningstar India, said. With US inflation hitting a 40-year high, the stage has been set for rather aggressive rate hikes by the US Fed in coming months which could trigger further foreign outflows from Indian equities, he added.
Flows in emerging markets were mixed in the month of February 2022 till date, said Shrikant Chouhan, head of equity research (retail) at Kotak Securities. Thailand, Indonesia, South Korea and the Philippines reported positive flows to the tune of USD 1,155 million, USD 580 million, USD 477 million and USD 133 million, respectively.
On the other hand, Taiwan reported negative flows to the tune of USD 410 million, he added. “In the light of the weakness in global markets and the spurt in US 10-year bond yield to above two per cent, FPI selling is likely to continue in the coming days,” V K Vijayakumar, chief investment strategist at Geojit Financial Services, said.
FPI selling in financials, particularly high-quality banking stocks, have made their valuations attractive, he added.