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As per depositories data, overseas investors took out Rs 15,342 crore from equities and Rs 3,629 crore from the bonds market between February 1-18. At the same time, they invested Rs 115 crore in hybrid instruments.
This translates into a net outflow of Rs 18,856 crore during the period under review. This is the fifth consecutive month of foreign fund outflows.
”Geopolitical tension and chances of a rate hike by US Fed have triggered outflows from FPIs in the recent times from the Indian equity markets. They sharply increased the pace of selling after the US Fed indicated an end of the ultra-loose monetary policy regime,” said Himanshu Srivastava, Associate Director – Manager Research, Morningstar India.
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”FPIs net outflow from Indian equity in last one year is close to USD 8 billion. This figure is the highest since 2009. In February to date, FIIs have sold worth approx Rs 17,500 crore. The FPI view of India is that India has already considered earnings growth of 16-18 percent CAGR for FY23 and FY24, based on expectations of earnings and economic growth cycle…
”Yet these estimates don’t account for risks of the rising cost of capital in the US (India’s cost of capital is linked to US cost of capital) and therefore PE contraction potential, nor of inflation risk hurting earnings growth estimates,” said Rajesh Bhatia, MD, and CIO, ITI Long Short Equity Fund.
FPIs can be expected to sell more going forward unless market corrections make valuations attractive, said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Domestic institutional investors and HNIs are slowly accumulating high-quality financials whose valuations have turned attractive due to sustained FPI selling, he added.