Foreign Investors Adopt Cautious Approach Ahead Of Budget, Withdraw Rs 17,000 Crore In Jan

Investors pulled out a net of over Rs 17,000 crore in January due to attractiveness in the Chinese markets besides adopting a cautious approach ahead of the Union Budget and US Federal Reserve meeting

For FPIs, 2022 was a subdued year in terms of flow and withdrawal from equities after a net investment in the preceding three years.

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New Delhi: After foreign portfolio investors retreated from the equity markets in a big way in 2022, the investors pulled out a net of over Rs 17,000 crore in January. Foreign investors have offloaded investment as the Chinese markets remain desirable besides adopting a cautious approach ahead of the Union Budget and US Federal Reserve meeting, reported news agency PTI

The outflow in January came after the market received a net inflow of Rs 11,119 crore in December and Rs 36,239 crore in November.

Last year, foreign portfolio investors (FPIs) had withdrawn Rs 1.21 lakh crore from the Indian equity markets on the back of aggressive rate hikes by the central banks globally, particularly the US Federal Reserve. Other factors that contributed to the withdrawal include volatile crude, rising commodity prices, and the Russia-Ukraine conflict.

For FPIs, 2022 was a subdued year in terms of flow and withdrawal from equities after a net investment in the preceding three years. FPIs have made a net withdrawal of Rs 17,023 crore this month (till January 27), the report said based on the data with the depositories.

The huge outflow exceeded by a big margin the previous record of Rs 53,000 crore net withdrawal in 2008

However, experts were of the view that 2023 is expected to be better on positivity about overall macroeconomic trends in India. This year, most of the major central banks started normalising the monetary policy, which resulted in the departure of hot money from emerging markets including India. This resulted in the unprecedented rise in prices (Inflation) in most of the economies, Sanjiv Bajaj, Joint Chairman and MD of Bajaj Capital was quoted as saying in the PTI report.

India, on average, receives 2-3 per cent of the global cross-border portfolio equity flows. Since 2000, the current year would be only the fourth year when Indian equities would be witnessing a net outflow.