New Delhi: In light of the high US dollar index, the weak rupee, and the tightening of monetary policy, foreign portfolio investors (FPIs) have pulled money totaling 5,992 crore from Indian stock markets so far in October, turning them into net sellers for the second consecutive month.
They sold equities in India worth 7,624 crore in September, according to statistics from National Securities Depository Limited. On a cumulative basis, they have sold 174,781 crore so far in 2022.
Foreign portfolio investors (FPIs) have been selling stocks in the Indian markets for the last year, starting in October of last year, with the exception of July and August, when they were net purchasers.
An ongoing outflow of capital from Indian markets was caused by tightening monetary policy in advanced economies, a rise in the demand for commodities priced in dollars, and strength in the US dollar. In periods of significant market uncertainty, investors often favour stable markets.
The persistent currency devaluation and declining Indian foreign exchange reserves further contributed to the gloomy market sentiments.
Because of the RBI’s potential market intervention to protect the weakening rupee, India’s foreign exchange reserves have been decreasing for several months.
The rupee crossed the 83 threshold for the first time ever on Wednesday. According to market estimates, the rupee has lost between 11 and 12 percent of its value so far this year.
India’s foreign exchange reserves dropped by $4.5 billion from the previous week to a more than two-year low of $528.367 billion for the week ending on October 14.
For the record, since since Russia invaded Ukraine in late February, when imports of oil and other goods became more expensive globally, the foreign exchange reserves have decreased by about $100 billion.
