June is not yet over, however, has emerged as the most bearish month for the Indian equities market in terms of foreign funds. FPIs (foreign portfolio investors) have so far pulled out ₹45,841 crore in June which is the highest monthly outflow in 2022 currently. So far this year, the selloff in the equities market is nearly 17 times higher than compared to the selling in the debt market.
This month, as of June 24, FPIs outflow stood at ₹45,841 crore from the equities market – way higher than the previous month’s outflow, as per NSDL data.
In May, the foreign funds’ outflow was at ₹39,993 crore, while in April, the selloff was at ₹17,144 crore.
So far in the first quarter of FY23 (April 2022 – up to June 24, 2022), FPIs outflow is at ₹1,02,978 crore from the equities.
In January to March 2022 period, the outflow from equities was to the tune of ₹1,10,018 crore.
The June data has also surpassed the March month deep selloff which had recorded an outflow of ₹41,123 crore. Meanwhile, the outflow was at ₹35,592 crore and ₹33,303 crore in February and January this year.
Overall, in less than six months of 2022, FPIs outflow amounts to ₹2,12,996 crore in the equity market- 16.99 times higher compared to the outflow of ₹12,530 crore in the debt market.
FPIs outflow including equities, debt, debt-VRR, and hybrid market stands at ₹2,19,705 crore so far in 2022 to date.
With less than a week left for June to complete, one can only imagine how far FPIs are willing to pull their money from the equities market. The tragedy is that FPIs won’t turn bullish at least in the near term and hence the selling pressure is expected to continue.
On FPIs outflow, Manoj Purohit, Partner & Leader – Financial Services Tax, BDO India said, “The RBI’s tightening of the monetary policy and inflated global commodity prices have primarily led the domestic markets to bleed in terms of substantial cash outflows from the equity markets during the last few months. The pace of such withdrawals was last seen when the pandemic spurred in the first quarter of 2020.”
“Globally, the ongoing military conflict between Ukraine and Russia, rising fed rates, and the return of the pandemic outbreak have further added fuel to the fire,” Purohit added.
Going forward, Purohit said, “This short-term pace of negative volatility is likely to slowdown in the coming weeks if not reversed completely.”
According to the BDO India expert, India is still on a better footing as compared to other global markets primarily on account of sustained growth patterns, better GDP numbers, recovering forex reserves, consistent demand from consumers, and good financial numbers by large corporates.