Foreign investors have withdrawn Rs 17,696 crore from Indian markets in December so far

Foreign portfolio investors (FPIs) withdrew Rs 17,696 crore from Indian markets in December so far amid uncertainty over the novel coronavirus strain, Omicron, and expectations of a faster decline by the US Federal Reserve.

According to depositors’ data, FPI acquired Rs.13,470 crore from equity, Rs.4,066 crore from debt segment and Rs.160 crore from hybrid instruments between December 1-17.

In November, FPIs were net sellers to the tune of Rs 2,521 crore in the Indian markets. There are still uncertainties, both globally and locally, said Himanshu Srivastava, Associate Director – Director of Research at Morningstar India.

He added that concerns about the highly transmissible omicron variant of the coronavirus persist and have affected the global growth outlook. “Economic growth has also been relatively slow, and India’s earnings have not grown much,” he added. If the situation worsens, it could prompt them to repatriate investments from emerging markets like India which are more vulnerable to turmoil in global markets.

“As banking constitutes the largest FPI holding, it bears the brunt of the FPI sale,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services.

He added that the continuous selling of the foreign investment index made high-quality banking stocks attractive from a valuation perspective. Regarding other emerging markets, Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities said South Korea, the Philippines, Taiwan, Thailand and Indonesia saw inflows of $1,870 million, $1,707 million, $297 million and US$94 million and US$57 million respectively. He added, “FDI inflows are expected to remain volatile given major events such as the upcoming government elections and monetary tightening by developed countries.”