Foreign portfolio investors withdrew Rs 1,586 crore worth of funds from the Indian stock market in October and became net sellers for the second consecutive month amid the US dollar index. strong, weak rupee and tight monetary policy.
However, the volume of capital outflows has decreased significantly this week with Indian stock indexes delivering sizable returns for investors. Indian stock indexes have risen in the past 9 out of 10 sessions.
In September, foreign investors sold Rs 7,624 worth of shares in India, data from National Securities Depository Limited showed. So far in 2022, they have sold Rs 170,375 worth of shares on an accrual basis.
Except for July and August when they were net buyers, foreign portfolio investors (FPI) sold shares in the Indian market for a year, starting last October, for various reasons.
Tight monetary policy in advanced economies including increased demand for dollar-denominated commodities and the strength of the US dollar have triggered consistent cash flows from Indian markets. Investors generally prefer stable markets during times of high market uncertainty.
Furthermore, the persistent depreciation of the rupee and the depletion of India’s foreign exchange reserves also affected the weak market sentiment.
India’s foreign exchange reserves have been depleted for months now as the RBI is likely to intervene in the market to protect the depreciating rupee.
India’s foreign exchange reserves for the week ending Oct. 21 fell to a fresh two-year low of $524.520 billion, down $3.85 billion from the previous week.
For the week ending October 14, the country’s foreign exchange reserves stood at $528.367 billion, RBI data showed.
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