FPIs pull out ₹52,704cr from equities in March
What's the story
Foreign portfolio investors (FPIs) have withdrawn a whopping ₹52,704 crore from Indian equities in the first half of March. The massive sell-off comes amid rising tensions in West Asia, rupee depreciation, and fears over high crude oil prices affecting India's growth and corporate earnings. The latest exodus follows a record inflow of ₹22,615 crore into Indian equities in February, the highest monthly inflow in 17 months.
Market dynamics
FPIs were net sellers for 3 consecutive months
Before the recent sell-off, FPIs were net sellers for three consecutive months, withdrawing ₹35,962 crore in January, ₹22,611 crore in December, and ₹3,765 crore in November. In March alone (until March 13), FPIs sold equities worth some ₹52,704 crore in the cash market and remained net sellers on all trading days of the month. The pullout has been mostly attributed to rising geopolitical tensions in West Asia.
Expert opinions
Geopolitical tensions and economic impact
Vaqarjaved Khan, a Senior Fundamental Analyst at Angel One, said the escalating tensions in West Asia and fears of a prolonged conflict disrupting the Strait of Hormuz have pushed Brent crude above $100 a barrel. This has triggered a risk-off move, that is compounded by persistent rupee weakness near the ₹92 level, elevated US bond yields, and profit-booking after earlier inflows.
Performance
Weakness in global equities and FPI indifference
VK Vijayakumar, the Chief Investment Strategist at Geojit Investments, echoed Khan's views. He said weakness in global equities after the West Asia conflict, the depreciating rupee and fears of high crude prices impacting India's growth and corporate earnings have affected FPI sentiment. He also noted that the weaker returns from India compared to developed and emerging markets over the last 18 months have led to FPI indifference.