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FPIs pull out ₹1.07 lakh cr from equities in Q1FY23, highest outflow in June. What’s ahead.Rupee falls ! Is there light at the end of the tunnel?
The June outflow in equities is massively 35.5 times higher than an outflow of merely ₹1,414 crore in the debt market during the same month. In the months of 2022 (January – June), the outflow comes to the tune of ₹2,17,358 crore from the equities. On July 1st, the outflow is at ₹261 crore from the market – taking the overall outflow at ₹2,17,619 crore so far this year.
The month of June turned out to be a bloodbath for the equities market when it comes to foreign funds outflow. The Foreign Portfolio Investors (FPI) removed a whopping ₹50,203 crore from the equities market in June – the highest monthly outflow so far in June. However, the start of July also saw money going out from the Indian market in the case of overseas investors. Note worthily, FPI outflows are expected to cool down going forward.
In June, FPIs outflow stood at ₹50,203 crore from the equities market – rising by 25.53% from the previous month’s outflow which stood at ₹39,993 crore. In April, the outflow stood at ₹17,144 crore from the equities, as per NSDL data.
The outflow in June is highest compared to the previous five months of 2022. Not only that, the June outflow in equities is massively 35.5 times higher than an outflow of merely ₹1,414 crore in the debt market during the same month.
For the first quarter of FY23 (April – June 2022), FPIs outflow stands at ₹1,07,340 crore from the equities.An analyst said, “this massive capital outflow has significantly contributed to the depreciation in INR which breached 79 to the dollar recently. The relentless FPI selling has to be seen in the context of a steadily rising dollar and bond yields in US.”
“FPIs are selling more in countries with rising current account deficits ( CAD) like India because the currencies of such countries are vulnerable to further depreciation,” However towards the end of June FPI selling has been showing a declining trend.
In six months of 2022 (January – June), the outflow comes to the tune of ₹2,17,358 crore from the equities. On July 1st, the outflow is at ₹261 crore from the market – taking the overall outflow at ₹2,17,619 crore so far this year.
According to Research Analysts, the ongoing FPI selling in Indian equities is turning out to be the highest selling spree since the global financial crisis (GFC) of CY08 with a Trailing 12-month (TTM) FPI cumulative selling in the secondary market of $53 billion versus $28 billion during the GFC, as per provisional flows data from exchanges.
So investors will have to take positions carefully.
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