Foreign portfolio investors (FPIs) took out Rs 50,203 crore of shares from India in June, according to the latest National Securities Depository data.
FPIs have been continuously selling stocks in Indian markets over the past nine to 10 months for a variety of reasons, including monetary policy tightening, a widening current account deficit due to the depreciation of the rupee, and rising dollar and bond yields in the US. the US.
FPIs generally favor advanced economies in times of sharp volatility and uncertainty in the general financial markets.
So far, in 2022, they have sold shares worth Rs 217,619 crore, NSDL data showed. During the same period, Sensex and Nifty were down more than 10 percent.
“This massive capital outflow has contributed significantly to the depreciation of the INR, which has recently crossed $79. The relentless selling of FPIs should be seen in the context of a steadily rising dollar and US bond yields,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
“FPIs are selling more in countries with rising current account deficits, such as India, because such countries’ currencies are vulnerable to further depreciation. Towards the end of June, FPI sales have slowed down.”
This trend will only be stopped if the dollar stabilizes and US bond yields fall, Mr Vijayakumar added.