FPIs pull out INR 2,249 cr from Indian equities in July so far

FPIs pull out INR 2,249 from the Indian equities

Following a period of net inflows, foreign portfolio investors (FPIs) dragged out Rs 2,249 crore from the Indian equities section in July’s first seven trading sessions.

This could be primarily attributed to gain booking by FPIs among markets speculation near record-breaking highs and investors preferring to stay on the sidelines, stated Morningstar India Associate Director Himanshu Srivastava.  FPIs pull out INR 2,249 cr from Indian equities in July so far

V K Vijayakumar, the chief investment strategist, said it was essential to appreciate that they are not selling big. “This is because despite valuations are extended, and there are no signs of a huge crash in markets. A sharp dip in US 10-year security bond yield to around 1.3 per cent has repeatedly tilted the market in favour of equity,” he replied.

He further added that the steady rise in the dollar index had become a headwind for capital flows to emerging markets. Conversely, these debt segments witnessed a net inflow of about INR 2,088 crore during July 1 and July 10, as per the depository data.

The cumulative net outflow during the time under review stood at INR 161 crore. During June, FPIs converted net investors to INR 13,269 crore in the Indian markets (equity plus debt) after prevailing net sellers during April and May.

Kotak Securities Executive Vice-President Shrikant Chouhan stated the MSCI Emerging Markets Index had lost 3.9% this week overall. “All key developing markets, including Asian markets, have witnessed FPI outflows this month till date.

“Indonesia, Thailand, South Korea, Philippines and Taiwan examined month-to-date FPI flows of USD 77 million, USD 171 million, USD 89 million, USD 991 million and USD 1,640 million sequentially,” he stated.

Concerning the future of FPI investment, he stated India is presumed to remain vulnerable to US Federal Reserve’s financial policy and surging crude oil prices.

“High crude oil rate hurts India’s external record, results in greater inflation and reasonable currency depreciation which can unfavourably impact the foreign portfolio flows,” Chouhan continued.

Srivastava replied that interim profit booking could not be commanded out given huge valuations, while dollar movement could also impact the flows moving ahead.

 

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