FPIs have adopted a cautious approach ahead of the attraction of Chinese markets and the general budget and the meeting of the US central bank Federal Reserve.
Finance Minister Nirmala Sitharaman will present the general budget on 1 February . Before the budget, concern has started appearing in foreign investors. Concerns have started increasing about how the general budget of the country will be. The effect of this has been that in the month of January, before the budget, investors withdrew Rs 17,000 crore from the market. Foreign portfolio investors (FPIs) have pulled out more than Rs 17,000 crore on a net basis from the Indian stock markets since the beginning of this month i.e. January. FPIs have adopted a cautious approach ahead of the attraction of Chinese markets and the general budget and the meeting of the US central bank Federal Reserve.
Earlier, FPIs had put Rs 11,119 crore in Indian stocks in December and Rs 36,239 crore in November. Overall, FPI had withdrawn Rs 1.21 lakh crore from the Indian stock markets in 2022.
Waiting for the results of the budget and US Fed meeting
Globally, aggressive interest rate hikes by central banks, especially the Federal Reserve, volatility in crude oil prices, high commodity prices and the Russia-Ukraine war have led to FPI sell-offs last year. Prior to this, during the last three years, FPIs were net buyers in the Indian stock markets. According to depository data, FPIs have made a net withdrawal of Rs 17,023 crore from stocks this month (till January 27).
Himanshu Srivastava, associate director-manager research at Morningstar India, said that FPIs are adopting a cautious approach. They are adopting a cautious approach ahead of the upcoming General Budget and Federal Reserve meeting on February 1. The Federal Reserve's Monetary Committee will meet on January 31 and February 1. Srivastava said that apart from this, FPIs are focusing on China since the market reopened after the lockdown. China had imposed strict lockdown under its zero covid policy. Due to this, the markets of China have declined and they have become attractive in terms of value.
Leaving India, invested money in China and Hong Kong markets
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said that in January, FPI's strategy was to sell in India and buy in more or less cheap markets like China, Hong Kong, South Korea and Thailand. FPIs have invested Rs 3,685 crore in debt or bond securities this month. Apart from India, FPI has also withdrawn from the Indonesian market. At the same time, they are buying in markets like Philippines, South Korea and Thailand.
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