homemarket NewsForeign investors' stake in Indian stocks is down to a 2 year low as outflow continues for 7th straight month
Foreign investors' stake in Indian stocks is down to a 2-year low as outflow continues for 7th straight month
Last time the stake of foreign investment in the top 500 companies on NSE was lower than the current level, it was the start of the COVID-19 pandemic when the markets saw panic selling like never before. Motilal Oswal's Raamdeo Agarwal believes that this outflow may continue in the near-term.
Foreign investors have pulled out Rs 17,144 crore from the Indian equity market in April amid fears of an aggressive rate hike by the US Fed making it the seventh straight month of outflows. Speaking to CNBC-TV18, Raamdeo Agrawal of Motilal Oswal believes that this may continue for some time more before the inflows return.
The last time the stake of foreign investment in the top 500 companies on NSE was lower than the current level, it was the start of the COVID-19 pandemic when the market saw panic selling like never before.
So, when will the FIIs come back and is there more outflow left before that?
"It looks that directionally they might keep selling because the other emerging markets are much cheaper. So my understanding is that they might remain subdued or maybe sell at the margin for some more time," said Agarwal.
According to a Motilal Oswal report, while the Nifty rose 19 percent last fiscal, a closer look within the NSE 500 shows that the foreign institutional investor (FII) and domestic institutional investor (DII) purchases depicted divergent sequential trends.
| Nifty 500 | QoQ | YoY |
| FII | down 40bp | down 210 bps |
| DII | up 70bp | up 30bps |
FII holdings in Nifty 500 (USD billion)
While the domestic investors, on a quarterly comparison, increased their holdings in all sectors except capital goods, the foreign investors increased their holdings in only five sectors – metals, telecom, utilities, PSU banks and chemicals.
Check out the full interview of Raamdeo Agarwal on Youtube:
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(Edited by : Abhishek Jha)
First Published: Apr 29, 2022 1:54 PM IST
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