Global headwinds led to FPI sell-off
The FPIs pulled out around Rs16k cr from the Indian capital markets during April-Dec FY23 as compared to an outflow of Rs5,578 cr in the year-ago period amid recessionary fears
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New Delhi: Global economic factors such as inflationary pressures, monetary tightening by central banks, and recessionary fears in advanced economies exerted pressure on FPIs to sell in Indian markets, Economic Survey 2022-23 said on Tuesday. In addition, investors were sitting on gains from Indian stocks that could be realised to offset losses elsewhere, the survey noted.
These factors led to foreign portfolio investors (FPIs) pulling out a net amount of Rs 16,153 crore from the Indian capital markets during April-December FY23 as compared to an outflow of Rs 5,578 crore in the year-ago period, with both equity and debt segments witnessing net outflows. Segment-wise, FPIs made a net withdrawal of Rs 11,421 crore from equity markets and Rs 12,400 crore from debt markets.
On the other hand, they invested a net amount of Rs 8,662 crore through debt Voluntary Retention Route (VRR) during the period under review. However, on account of strong macroeconomic fundamentals of the Indian economy and the improvement in market risk appetite from time to time, assets under custody of FPIs increased despite the outflows driven by global factors, the survey said.
Total assets under custody with FPIs increased by 3.4 per cent to Rs 54 lakh crore at the end of November 2022 as compared to Rs 52.2 lakh crore at November-end 2021.
