New Delhi: The general budget is going to come on 1 February. Before the budget, concern has started appearing among the investors abroad. Trouble has started increasing regarding how the general budget of the country will be. The effect of this has been that in the month of January before the budget, investors withdrew Rs 17,000 crore from the market. Foreign portfolio investors (FPIs) have pulled out over Rs 17,000 crore on a net basis from Indian stock markets since the beginning of this month i.e. January. FPIs have adopted a cautious stance ahead of the attractiveness of Chinese markets and the general budget and the meeting of the US central bank Federal Reserve. Earlier, FPIs had infused Rs 11,119 crore in Indian stocks in December and Rs 36,239 crore in November. Overall, FPIs had withdrawn Rs 1.21 lakh crore from the Indian stock markets in 2022.
Aggressive interest rate hikes by global central banks, especially the Federal Reserve, volatility in crude oil prices, higher commodity prices and the Russia-Ukraine war have led to FPI selloff in the past year. Prior to this, during the last three years, FPIs were net buyers in the Indian stock markets. According to depository data, FPIs have made a net withdrawal of Rs 17,023 crore from equities this month (till January 27). Himanshu Srivastava, Associate Director-Manager Research, Morningstar India, said that FPIs are adopting a cautious approach. They are taking a cautious approach ahead of the upcoming General Budget and Federal Reserve meeting on February 1.
The Federal Reserve’s Monetary Committee will meet on January 31 and February 1. Srivastava said that apart from this, FPIs are focusing on China since the market reopened after the lockdown. China had imposed a strict lockdown under its zero covid policy. Due to this, the Chinese markets have declined and they have become attractive in terms of value.
VK Vijayakumar, chief investment strategist, Geojit Financial Services, said the FPI strategy in January was to sell in India and buy in more or less cheaper markets like China, Hong Kong, South Korea and Thailand. FPIs have invested Rs 3,685 crore in debt or bond securities this month. Apart from India, FPIs have also withdrawn from the Indonesian market. At the same time, they are buying in markets like Philippines, South Korea and Thailand.
