The selling process by foreign investors started eight months ago and continues today.
Foreign portfolio investors (FPIs) also started selling by July. On the first day of the month, FPIs pulled a total of Rs 811 crore from the Indian market. FPIs have kept a sell-off trend in the Indian capital markets this year.
According to NSDL data, FPIs pulled out Rs 811 crore on July 1, 2022, with massive sell-offs in equity and debt-VRR markets. Overall, FPI outflows were ₹261 crores in the equity market, while the sell-off in the debt-VRR market was ₹372 crore. Meanwhile, the debt market also recorded a withdrawal of ₹186 crores. However, this was not the case in the hybrid market, as FPIs had invested Rs 8 crore in this basket on Friday. Globally, there was a sharp fall in the market amid geopolitical tension, high crude oil prices, inflation, pandemic, and tightening of aggressive monetary policy.
Because of this, investor sentiments have dipped in the form of fears of a possible recession. Foreign investors have sold heavily amid fears of a slowdown in economic growth. On the domestic front, in the case of the withdrawal of foreign investors in June, most of the money went out of the market. FPIs pulled out Rs 51,422 crore in June from the Indian markets, making it the best seller ever. Withdrawals in April and May were around ₹36,518 crores and ₹22,688 crores. Dr. VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said, “FPIs are selling more in countries with rising current account deficit (CAD) like India as currencies of such countries are more vulnerable to depreciation. However, now the selling flow can be seen decreasing here. Vijayakumar said that if the market expects or reacts to good first-quarter results in July, FPIs can sell again. This sell-off will stop only when the dollar stabilizes, and US bond yields decline.