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In future, FPI selling may continue in the near term, however, a moderation in selling is expected in the short to medium term, said Vinod Nair, Head of Research
Told.
“This is because a major part of the changes such as economic slowdown, sharp monetary policy, supply crunch and high inflation is in market prices, which had been consolidating over the past 7 months. And for central banks to maintain aggressive policy. Inflation should remain high over the long term.
According to the data, during June 1-10, foreign investors made a net withdrawal of Rs 13,888 crore from equities. FPIs are continuously withdrawing money from Indian Equity From October 2021.
Nair attributed the latest FPI outflows to the anticipation of a sharp Federal Reserve meeting.
“Global markets witnessed selling pressure in anticipation of record high inflation numbers in the US, which could force irrigated To raise interest rates. At 8.6 percent, US inflation is at a 40-year high. Talk of stagnation and China announcing another round of lockdown put pressure on investors, triggering another round of selling,” Vijay Singhania, President, tradesmartTold.
simultaneously, reserve Bank of India The RBI increased the repo rate by 50 basis points and revised its inflation forecast. The central bank expects inflation to remain above 6 per cent for three quarters, which will put pressure on bond yields. These factors encouraged foreign investors to head out the door, he said.
Apart from equity, FPIs pulled out a net Rs 600 crore from the debt market during the period under review. They have been withdrawing money from the loan side continuously since February.
From a risk return perspective and with interest rates rising in the US as well, Indian debt may not provide an attractive investment option to foreign investors, Himanshu SrivastavaAssociate Director – Manager Research, Morningstar IndiaTold.
except IndiaOther emerging markets, including Taiwan, South Korea, Thailand and the Philippines, have seen outflows so far this month. PTI SP Anu Anu
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