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FPIs are continuously withdrawing money from the market, so far in June, shares worth Rs 31,430 crore have been sold – News

Foreign portfolio investors: The stock market continues to fall continuously. Foreign portfolio investors (FPIs) continued to sell-off in June due to aggressive interest rates hike by the US central bank, high inflation and high valuations of stocks. So far this month, FPIs have withdrawn Rs 31,430 crore from Indian stocks. This information has been obtained from the data of the depository. FPIs have so far sold shares worth Rs 1.98 lakh crore in the year 2022.

Ups and downs will continue
Shrikant Chauhan, Head of Equity Research, Kotak Securities has said that the trend of FPIs will remain volatile going forward. FPIs continue to be sellers in emerging markets due to geopolitical tensions, rising inflation, tightening of monetary stance by central banks.

31,430 crore withdrawn till June 17
According to the data, FPIs have pulled out a net Rs 31,430 crore from the Indian stock markets this month till June 17. FPI selling continues from October 2021.

Fed Reserve increased by 0.75 percent
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, has said that global investors are reacting to the rising risk of recession across the world. Amidst rising inflation, the Federal Reserve has increased interest rates by 0.75 percent. The US central bank has indicated to take a tougher stance going forward.

Why are FPI investors selling?
He said that FPIs are mainly selling because of the strengthening of the dollar and rising yields on bonds in the US. The Federal Reserve, the Bank of England and the central bank of Switzerland have raised interest rates. Due to this, FPIs are moving from stocks to bonds.

Biggest drop since March 2020
TradeSmart Chairman Vijay Singhania has said that in such a scenario of uncertainty, when bonds are offering safety of capital and better returns, investors are sure to sell. America’s markets have seen the biggest weekly decline since March 2020. He said that inflation is a matter of concern on the domestic front and the Reserve Bank is increasing policy rates to check it.

Fed Reserve will increase interest rates even further
At the same time, Himanshu Srivastava, Associate Director-Manager Research, Morningstar India, believes that after the aggressive increase in interest rates by the Federal Reserve, the Reserve Bank will also increase policy rates in the next two-quarters.

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