There is chaos in the stock market, Sensex slips 2700 points, Nifty closed below 16250

Foreign investors are selling a lot of shares, selling shares worth 2.22 lakh crores in FY22

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Mumbai . Foreign Institutional Investors (FIIs) have been selling a lot of shares for the last almost 5 months. In the year ended March 2022, so far, FIIs have bought shares worth more than $ 29 billion (Rs 2.22 lakh crore). 80 per cent of these have been sold in just the last five months. Although domestic institutional investors including retail investors have bought every fall, their buying is so high that they could not match the FII inflows Huh.

The question is why foreign investors are selling so much. The high valuation was one of the reasons after the Nifty hit a record high of 18,604 in October 2021 with a gain of over 32 per cent since January 2021. Apart from this, the rising expectations of a higher rate hike by the US Federal Reserve to fight the increased inflation are the main reasons for the withdrawal of money by the FII. Globally, analysts expect the Fed to hike 5-7 policy rates in 2022.

The crisis of war further fueled the sell-off
Now the geopolitical tension between Ukraine and Russia has given further impetus to the withdrawal of FII money from India. Russia began its invasion of Ukraine on Thursday morning, with Moscow troops and vehicles entering Ukraine via Crimea. Later Western countries imposed severe sanctions on Russia to damage its economy.

Due to this, the equity market corrected around 13 per cent from record highs and many stocks traded well below their all-time highs.

How long will it take for relief from selling pressure?
Rakesh Singh, CEO, Fisdom Stock Broking says, “Foreign capital has a tendency to withdraw rapidly rather than investing in adverse macroeconomic and geopolitical events. The Russia-Ukraine standoff is expected to lead to a more rapid exit of foreign capital.

According to Rakesh Singh, as the worsening of conditions eases, foreign capital can be expected to return to the Indian markets in a favorable environment. Aditya Suresh of Macquarie Securities India told CNBC-TV18 on Thursday that the ongoing selling pressure from FIIs may not be relieved anytime soon as the country is on a valuation slop.

valuation too high
Suresh further added, “There is no major buying happening in India now as the earnings risk is very high and the valuations are very high.” Most analysts expect Nifty earnings to grow by around 20 per cent next year and 25-30 per cent in the current fiscal.

Tags: foreign investment, FPI, mutual fund investors, Share market, Stock Markets, stock return

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