FPIs pull out massive Rs 17,537 cr from Indian markets

Foreign portfolio investors (FPIs) pulled out as much as Rs 17,537 crore from the Indian markets in just three trading sessions of March as investors' sentiment got dented by the uncertainty triggered by the Russia-Ukraine conflict and rising crude oil prices.

As per depositories data, they pulled out Rs 14,721 crore from equities, Rs 2,808 crore from debt segment and Rs 9 crore from hybrid instruments between March 2-4.

This took the total net outflow to Rs 17,537 crore.

"The market sentiments have been impacted globally by the uncertainty triggered by the war and the surge in crude," said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Besides, they were sellers in the debt segment as well, amidst a depreciating rupee.

As per Himanshu Srivastava, associate director - Manager Research, Morningstar India, geopolitical tension of such a magnitude doesn't augur well for emerging markets like India with respect to foreign flows.

High valuations of the Indian equity markets, risk to corporate earnings and slow pace of economic growth have been keeping foreign investors at bay from investing substantially in Indian stock markets, he said.

"But the pace of outflows shot up sharply after US Fed decided to unwind stimulus measure and increase interest rates sooner than later. The outflows picked up pace further due to the war between Russia and Ukraine," he added.

Shrikant Chouhan, head of equity research (retail), Kotak Securities Ltd, said: "FPI flows in the emerging markets in the month of February 2022 was positive, except for India.

"Indonesia, the Philippines, S.Korea and Thailand witnessed inflows to the tune of $1,220 million, $141 million, $418 million and $1,931 million, respectively."

FPI flows are expected to be volatile in the coming months, due to the ongoing Russian invasion of Ukraine and its fallout in the form of sanctions, high inflation and likely increase in interest rate by Fed, he said.