Wednesday, March 29, 2023

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FPIs invest Rs 8,600 cr in Sept in Indian equities

New Delhi: Foreign investors have invested slightly less in Indian equity so far in September than they did in August, when they spent more than Rs 51,000 crore, due to the significant depreciation of the rupee.

Foreign portfolio investors (FPIs) are unlikely to make impulsive purchases in the future due to the rising dollar, according to VK Vijayakumar, chief investment strategist at Geojit Financial Services.

According to Basant Maheshwari, smallcase manager and Co-founder of Basant Maheshwari Wealth Advisers LLP, FPI flows will be impacted by indications of more rate hikes by the US Federal Reserve, concerns about a recession, the falling rupee, and ongoing tensions in Russia and Ukraine.

The most recent inflow follows net investments of roughly Rs 5,000 crore in July and Rs 51,200 crore in August, according to data from depositories.

After nine months of net outflows, beginning in October of last year, FPIs started to turn positive in July. They sold Rs 2.46 lakh crore in the Indian equity markets from October 2021 to June 2022.

The report shows that between September 1 and 23, FPIs invested Rs 8,638 crore in equity.

However, with alternating periods of buying and selling, FPI activity has become extremely volatile. They have already sold seven times this month. In fact, they have removed Rs 2,500 crore from the Indian equity markets over the last two trading sessions.

Vijaykumar attributed this trend to the increased FPI selling in recent days to soaring dollar and rising bond yields in the US.

Moreover, the 75 basis points (bps) rate hike by US Federal Reserve for the third consecutive time to control rising inflation and the rising dollar have affected FPI buying, Wealth Advisers LLP’s Maheshwari said.

”The US Fed’s hawkish tone on interest rates and the fear of a global recession fuelled pessimism among investors,” Shrikant Chouhan, Head – Equity Research (Retail), Kotak Securities, said.

Since September, foreign investors have slowed down their equities purchases in India. After a hotter-than-anticipated inflation report crushed hopes that the US Fed would pull back its rate hikes in the upcoming months, the situation took a turn for the worse.

The US inflation rate for August increased from the month before by 0.1% to 8.3%. It decreased in comparison to one year earlier, when it was 8.5%.

In addition to dampening emotions and making investors risk adverse toward emerging markets like India, the central bank chair’s tough posture made it clear that the Fed would again push for another 75 bps raise at its next meeting. According to Morningstar India’s Himanshu Srivastava, Associate Director of Manager Research.

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