Foreign portfolio investors (FPI) withdrew Rs 5,992 crore from the Indian stock market in October and became net sellers for the second consecutive month amid the dollar index. The US dollar is strong, the rupee is weak and monetary policy is tight.
In September, it sold Rs 7,624 worth of shares in India, data from National Securities Depository Limited showed. So far in 2022 they have sold Rs 174,781 crore on an accrual basis.
Except for July and August when they were net buyers, foreign portfolio investors (FPI) have been selling shares in the Indian market since a year now, starting last October due to 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 outflows 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.
On Wednesday, the rupee broke the 83 mark for the first time in its history. So far this year, the rupee has depreciated by around 11-12%, market data shows.
Of India Foreign exchange reserves for the week ending October 14 fell to a more than two-year low of $528.367 billion.$4.5 billion down from last week.
For the record, foreign exchange reserves have fallen by about $100 billion since Russia invaded Ukraine in late February as imports of energy and other commodities are more expensive globally.