Foreign portfolio investors (FPIs) have pressed the sell button in the Indian stock markets and if the recent data is anything to go by then they have pressed it really hard.
Data shows that foreign investors have been net sellers in every month since October last year and the cumulative net sales in the six months – current month included – has breached the $15 billion mark to touch $15.41 billion.
More importantly, the current selling streak is the longest for FPIs since 2008 when foreign investors sold Indian shares for seven successive months starting from May. The cumulative selling, however, was only around $9.71 billion in 2008.
Meanwhile, the pace and quantum of the current selling can be gauged from the fact that the months of January and February each saw net sales breaching the $4 billion mark to register the highest single month sales since March 2020.
The current month has seen just a few trading sessions as yet but FPI net selling has already crossed the $1 billion mark.
Market participants attribute the heightened selling to the enhanced volatility and concerns emanating from the ongoing war between Russia and Ukraine, which has already pushed global crude prices to multi-year high of $118 a barrel.
Incidentally, the geopolitical crisis has come at a time when stock markets globally were already trading weak on account of the imminent rate hike by the US Federal Reserve. Interestingly, the sudden full-scale invasion has given rise to theories that the Fed might just put on hold its plans to hike interest rates in the immediate future.
Back in India, the impact of heavy selling by the foreign investors is clearly visible as the markets have come off significantly from the highs touched in October 2021 – the month since FPIs started selling in huge quantities.
The benchmark S&P BSE Sensex had touched an all-time high of 62,245.43 during intra-day trades on October 19. Since then, the barometer has fallen nearly 11.5 per cent – 7,142 points – to close at 55,102.68 on Thursday.
Not surprisingly, the India VIX index, which is looked upon as a barometer of near-term volatility, has risen sharply in the last few weeks and is currently hovering around 28-levels. The index has jumped more than 70 per cent in the current calendar year – it was trading around 16 at the start of 2022.
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