Fpi Stock Market Caution Continues, Over ₹35,000 Cr Dumped So Far In May

The caution of Foreign Portfolio Investors (FPIs) in the Indian stock market is unshakable so far this year and so far, the month of May has followed a similar pattern. In the current month so far, FPIs have withdrawn more than $35,000 from the stock market, while the overall outflow in the year is massive during $1.62 lakh crore.

According to NSDL data, in the equity market, FPIs eliminated a total of $35,137 crore until May 20. This is more than twice the output of $17,144 crores recorded in the entire month of April.

For FPI’s sell-off in May, Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said: “The main factor behind the relentless sell-off in FPI is the appreciation of the dollar which has led the dollar index above 103. Also, India is the important emerging market where FPIs make big profits and the market is very liquid to absorb FPI sales.

“Given that the mother market, the US, is weak and the dollar is strengthening, FPIs are likely to continue selling in the short term,” Vijaykumar added.

Appetite for the equity market has been volatile both domestically and globally. A number of events and factors have weakened investors’ confidence in the market with the war between Russia and Ukraine and inflationary pressure emerging as spoilers.

So far this year, the FPI has pulled out a huge $1,62,299 crores from the Indian stock market. The highest liquidation was in March when the exit stood at $41,123 crores. During the first five months of 2022, FPI’s sell bias slowed in April, but picked up again in May, as fears of an economic recovery from the pandemic appeared to subside amid skyrocketing inflation, interest rates, supply chain constraints and uncertainties surrounding Russia. Ukraine conflict. In addition, a possible recession in the offing had added to the problems.

In January, FPI’s output was $33,303 crore in the stock market, while in February investors eliminated $35,592 crores.

So far in 2022, the Sensex and Nifty 50 are down around 8%.

Another volatile trading week has closed with Indian markets witnessing a relief rally on Friday following positive global signals. Sensex settled at 54,326.39, up 1,534.16 points or 2.91%. The Nifty 50 finished at 16,266.15 with an increase of 456.75 points or 2.89%.

Vinod Nair, head of research at Geojit Financial Services, said: “The market showed a confident but calm rally throughout the day, supported by strengthening global markets, especially the Asian market. The Chinese central bank cut a key interest rate to support growth, injecting optimism into emerging markets. With concerns about an economic slowdown and rate hikes around the world, investors will continue to invest cautiously. Value stocks should do well during this period of consolidation.”

Meanwhile, Vijayakumar said: “The excessive volatility in the market is generally due to two reasons. First, the market has ruled out severe monetary tightening by the Fed, which is likely to push the fed funds rate to around 3% in 2023. Second, the market has not entirely ruled out the likelihood of the US economy going into recession in 2023. Until then There is clarity on the second theme, the ‘risk-off, risk-advance mode’ in the market is likely to continue in the near term. The markets may take a few weeks to stabilize.”

Vijayakumar added: “It is important to appreciate the fact that the dominant feature of this market is bearish in the short term. The Nasdaq is 30% below peak and the S&P 500 is 19% below peak. These are reflections. of weakness in the market.”

On India, Vijayakumar concluded by saying: “IFIs are likely to continue selling as India is the only emerging market where they have good profits and the market provides the liquidity to sell.”

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