FPIs pull out Rs15,236 cr in Jan as China reopens

New Delhi: Foreign investors pulled out a net amount of Rs15,236 crore this month so far on attractive Chinese markets and concerns about the US economy entering a recession.

However, foreign portfolio investors (FPIs) have turned buyers in the last four trading sessions. The outflow in the month of January came following a net inflow of Rs11,119 crore in December and Rs36,239 crore in November. Overall, FPIs pulled out Rs1.21 lakh crore from the Indian equity markets in 2022 on aggressive rate hikes by the central banks globally, particularly the US Federal Reserve, volatile crude, rising commodity prices along with Russia and Ukraine conflict.

The year 2022 was the worst year for FPIs in terms of flow and withdrawal from equities comes following a net investment in the preceding three years. According to the data with the depositories, FPIs have made a net withdrawal of Rs15,236 crore this month (till January 20). The latest FPI sell-off was largely driven by the aggressive reopening of the Chinese markets after the lockdown. In accordance with its zero Covid policy, China had been enforcing rigorous lockdowns to reduce the number of Covid cases. As a result, Chinese markets fell, making them more appealing from a value standpoint, Himanshu Srivastava, Associate Director - Manager Research, Morningstar India, said. This caused FPIs to shift their focus from economies with relatively high valuations, like India, to China, he added. Additionally, concerns about the US economy entering a recession remain persistent, which was further supported by uninspiring US statistics, Srivastava said.