Foreign portfolio investors (FPIs) have sold assets worth about Rs 15,068 crore in Indian stock markets in the first two weeks of 2023, the latest data from National Securities Depository showed.
Foreign investors are wary of the risks associated with the potential return of COVID, as well as the looming global recession.
According to the data with the depositories, only two of the 10 trading days this month witnessed net purchases by overseas buyers.
In November and December 2022, foreign portfolio investors (FPIs) were net buyers. They had bought assets worth Rs 36,239 crore and Rs 11,119 crore, respectively.
Prior to November, they were net sellers in September and October amid the then-strong US dollar index, weak rupee, and tightening of monetary policy. Those fund inflows had supported Indian stock markets considerably.
Significantly, foreign portfolio investors (FPIs) have been selling stocks in the Indian markets for more than a year, starting in October 2021 for a variety of reasons, with the exception of July, August, November, and December when they were net purchases.
According to information on the NSDL website, cumulative sales of equities by foreign portfolio investors in India in 2022 totaled Rs 121,439 crore.
An ongoing outflow of capital from Indian markets was caused by tightening monetary policy in advanced economies, a rise in the demand for commodities priced in dollars, and strength in the US dollar. In periods of significant market uncertainty, investors often favour stable markets.
World Bank forecasts
Meanwhile, the World Bank has projected that the global economy will grow by a mere 1.7 per cent in 2023, down from the 3 per cent it estimated in its earlier forecast.
In 2024, the global economy is expected to increase by 2.7% as opposed to the earlier projection of 3%.
The newest Global Economic Prospects report from the World Bank indicates that global economy is rapidly declining as a result of increasing inflation, higher interest rates, less investment, and interruptions brought on by Russia’s invasion of Ukraine.
Any new unfavourable development, such as higher-than-anticipated inflation, an abrupt increase in key interest rates to contain it, a resurgence of the Covid-19 cases, or escalating geopolitical tensions, could send the world economy into recession given the precarious economic conditions, the report warned.