Fpis Invest Rs 8,600 Crore in September so far investment pace is slowing

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By PTI Sep 25, 2022, 12:32 PM IST (Released)

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The latest inflow follows net investment of Rs 51,200 crore in August and nearly Rs 5,000 crore in July, according to custodian data.

After pumping in more than Rs 51,000 crore last month, foreign investors have slowed the pace of stock buying in India in September so far as they invested just over Rs 8,600 crore, on a sharp depreciation of the rupee.

Going forward, foreign portfolio investors (REITs) are unlikely to buy aggressively amid the rising dollar, said VK Vijayakumar, chief investment strategist at Geojit Financial Services.

Indication of another rate hike by the US Federal Reserve, fears of a recession, depreciation of the rupiah and ongoing tensions in Russia and Ukraine will affect REIT flows, said Basant Maheshwari, fund manager. small business and co-founder of Basant Maheshwari Wealth Advisers LLP.

The latest inflow follows net investment of Rs 51,200 crore in August and nearly Rs 5,000 crore in July, according to custodian data.

REITs became net buyers in July after nine consecutive months of net outflows, which began in October last year. Between October 2021 and June 2022, they sold Rs 2.46 lakh crore in Indian stock markets. According to the data, REITs bought shares worth Rs 8,638 crore from September 1 to September 23.

However, REIT activity has become very volatile with alternating periods of buying and selling. They have sold out seven times this month so far. In fact, in the last two trading sessions, they withdrew Rs 2,500 crore from Indian stock markets.

Vijayakumar attributed the increase in REIT sales in recent days to the stronger dollar and rising bond yields in the United States.

In addition, the US Fed’s 75 basis point (bp) rate hike for the third consecutive time to control rising inflation and the surging dollar have impacted REIT buying, Maheshwari said. of Wealth Advisers LLP.

“The US Fed’s hawkish tone on interest rates and fears of a global recession have fueled investor pessimism,” said Shrikant Chouhan, Head – Equity Research (Retail), Kotak Securities.

Foreign investors have slowed down their purchases of stocks in India since September. The scenario turned adverse after a hotter-than-expected inflation report dashed hopes that the US Fed would scale back rate hikes in the coming months.

US inflation in August edged up 0.1% from the previous month to 8.3%. Compared to a year ago, it has eased since it was 8.5% previously.

The aggressive stance of the central bank chairman, who showed the Fed would opt for another 75 basis point hike for the fourth consecutive time at its next meeting, has rattled sentiment and made investors averse to the risk to emerging markets like India, Himanshu Srivastava, associate director – head of research, Morningstar India, said.

In addition, currency movement is another factor that REITs follow very closely as it has a significant impact on the returns they earn on their investments in any country. Therefore, outflows tend to accelerate in a scenario of rapid currency depreciation.

The sharp depreciation of the rupee as it hit a historic low of 81.09 rupees against the dollar does not bode well for foreign investment, he added. “With the dollar index above 111 and the US 10-year bond yield above 3.7%, REITs are unlikely to buy aggressively going forward. the dollar index and US bond yields are falling,” Vijayakumar said.

In addition, foreign investors injected Rs 5,903 crore into the debt market during the month under review. Excluding India, EPI flows were positive for Indonesia and the Philippines, while South Korea, Taiwan and Thailand saw outflows during the review period.

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