new Delhi. Due to the Russo-Ukraine war, the confidence of foreign investors in the Indian stock market has started to break amid the continuing uncertainty in the financial markets around the world. Due to this, Foreign Portfolio Investors (FPIs) are making frequent withdrawals from the domestic market. The banking and financial services sector is bearing the brunt of this.
According to depository data, foreign portfolio investors have made a record sell-off in the Indian stock market in the current financial year. FPIs have withdrawn more than Rs 79000 crore from the financial sector equity. This figure of withdrawal is from April 1, 2021 to March 15, 2022. During this period, foreign portfolio investors have sold a total of Rs 79028 crore.
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Best selling in banking sector
According to the latest data of depositories, during this period, the maximum withdrawal of Rs 49718 crore by foreign portfolio investors from the banking sector. Apart from this, there has been a sell-off of Rs 29310 crore in other financial services sector. The special thing is that FPI has withdrawn 20000 crores from the Indian stock market in just 10 trading sessions.
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High rating spoiled the game
Kranti Bathini, equity strategist at Wealthmills Securities, says the main reason for the massive exit from the banking and financial services sector is the portfolio building of FPI assets in India and the high valuations of stocks in the sector.
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The biggest impact on private banks
FPIs have historically made withdrawals from the banking sector. In this also, HDFC Bank, ICICI Bank, Kotak Mahindra have got the maximum withdrawal from the private sector. Not only in India, but FPIs have withdrawn from all emerging markets. As of March 15, 2022, the share of FPIs in 35 sectors of financial sector equity was 29.25 per cent or Rs 13.02 lakh crore.
Selling due to these reasons
Religare Broking Vice President (Research) Ajit Mishra says that the recent geopolitical reasons like rising interest rates in global markets, high valuations of Indian stocks, profit-booking after the last two years of rally and Russia-Ukraine war have led to FPIs in India. Withdrawing from the market. However, foreign investors had invested Rs 8531 crore in the first six months. He has remained a net seller since October 2021 and has withdrawn Rs 1.49 lakh crore from the domestic market till March 15, 2022.
Tags: FPI, Russia ukraine war, stock market
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