PremiumThe year has turned out to be a challenging and forgettable year for global equities, given the many headwinds, including rate hikes, energy crisis, Russia-Ukraine conflict, continued supply disruptions, FPI outflows, heightened inflation, and more. In September 2022, FPIs halted their buying streak of the two-consecutive month and pulled out ₹7,624 crore as inflationary pressure accelerated and recession fears escalated in major economies amidst monetary policy tightening.
With the FIIs continued selling spree of the Indian stocks, well-known Indian investor Shankar Sharma defined the act as the ‘special idiocy’ of selling the ‘best performing market’ in the world.
“If you need any proof that Wall Street & FIIs know next to nothing about Investing, look no further than their India Selling data in the past 18-20 months. It takes special idiocy to sell the best ( performing) market in the world," Sharma tweeted.
In 2022 so far (year-to-date or YTD), FPIs have removed about ₹1,66,349 crore from equities alone. Taking other instruments into consideration, the overall Indian market saw an outflow of ₹1,72,891 crore so far in the current year. Foreign institutional investors (FIIs) remained net sellers in the Indian capital market on Friday as they offloaded shares worth ₹1,011.23 crore, as per exchange data.
In the first half of the current fiscal (April-September FY23), FIIs have net sold $7.69 billion of Indian shares, becoming net sellers of $900 million in September after buying $7 billion in July-August. With the rupee plunging over 3% from August end to a lifetime low of 81.95 around September end, FIIs have turned cautious, net selling not only in the cash market but also massively shorting index futures to hedge their cash portfolios.
Foreign institutional investors (FIIs) continue their selling spree, and as per analysts, investors have turned deeply risk-averse after the US Federal Reserve’s latest rate action and the stated resolve to fight inflation. The exit from equities is also hastened by the escalation in the Russia-Ukraine conflict, driving investors to safe-haven dollar assets. The US Fed revising growth expectations has spooked investor sentiments, further adding to fears of recessions.