Overseas investors have withdrawn Rs 17,696 crore from the Indian markets in the month of December so far amid uncertainty owing to Omicron COVID-19 strain and expectations of quicker tapering by the US Federal Reserve.
Foreign portfolio investors (FPIs) pulled out Rs 13,470 crore from equities, Rs 4,066 crore from the debt segment and Rs 160 crore from hybrid instruments between December 1-17, as per the depositories data.
FPIs were net sellers to the tune of Rs 2,521 crore in Indian markets in November. Himanshu Srivastava, Associate Director – Manager Research, Morningstar India, told PTI that uncertainties continue to remain over the global as well as domestic fronts.
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The concerns over the highly transmissible Omicron variant of coronavirus persist and have impacted global growth outlook, he added.
“Also, the economic growth has also been relatively slow, and India’s earnings have not grown much,” Srivastava told the news agency.
If the situation worsens, it could further prompt them to redeem investments from emerging markets like India which are considered to be more prone to turmoil in the global markets.
“Since banking constitutes the largest FPI holding, it is bearing the brunt of FPI selling,” V K Vijayakumar, Chief investment Strategist at Geojit Financial Services said.
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Sustained FPI selling has made high-quality banking stocks attractive from the valuation perspective, he added.
With respect to other emerging markets, Shrikant Chouhan, Head – Equity Research (Retail), Kotak Securities said South Korea, the Philippines, Taiwan, Thailand and Indonesia, witnessed inflows of $1,870 million, $1,707 million, $297 million, $94 million and $57 million, respectively.
“FPI flows are expected to remain volatile given key events such as upcoming state elections and monetary tightening by developed countries,” he added.
(With inputs from PTI.)