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FPIs pull out of equities for eighth straight month

Mumbai/New York: As fears of a rate hike by the US Federal Reserve weighed heavily on market sentiment, foreign investors maintained their selling spree in the Indian equities last month, having pulled out pulled out nearly Rs 40,000 crore.

According to depositories data, the net outflow by foreign portfolio investors (FPIs) from equities reached Rs 1.69 lakh crore so far in 2022, after the outflux in May.

As per the data, foreign investors withdrew a net amount of Rs 39,993 crore from equities in May. This massive outflow is the major factor for the weakness in the domestic market.

In addition to equities, FPIs withdrew a net amount of about Rs 5,505 crore from the debt market during the period under review. Since February, they have been incessantly withdrawing money from the debt side.

According to analysts, FPI flows are expected to remain volatile in emerging markets on account of rising geo-political risk, rising inflation, tightening of monetary policy by central banks.

The US central bank has hiked rates twice this year in its battle against surging inflation caused by the supply chain disruption due to the Russia-Ukraine war.

On the domestic front too, the concerns over surging inflation as well as further rate hikes by the RBI, and its impact on the economic growth, loomed large, according to analysts.

Foreign investors have been taking out money from equities in the last eight months (from October 2021 to May 2022), withdrawing a massive net amount of Rs 2.07 lakh crore.

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