FIIs Selling in India
In this Blog, we will discuss the Impact of FIIs Selling. In the last few days, foreign investors have sold sharply in the Indian stock market. They have withdrawn more than 17,000 crore rupees in just 5 days. Experts say investors have a good chance of buying every fall.
The Indian stock market has been declining for the past month. Experts say the selling round may continue next month. However, FIIs are expected to return in the new year. Since then the market has been in a downward trend. it has fallen to 58680 levels. The Sensex has lost 3581 points.
Foreign Investors withdraw 87,000 crore rupees from the Indian Stock Market
According to information on SEBI's website, foreign investors sold for Rs 17900 crore in November. 87,000 crore has been withdrawn from the Indian stock market since the current financial year i.e. April 1.
On the other hand, domestic investors have made purchases worth Rs 13,000 crore in November. While shares worth Rs 69,000 crore have been purchased this fiscal.
Why did this happen?
Stock market experts said that the US is the main reason for foreign investors withdrawing money from India.
Reason Foreign Investors withdrawing Money from India
In the First place, experts revealed that the US central bank, the Federal Reserve, had given a relief package to bail out the economy from the corona. Under this package, the amount was directly received by the general public. Many more steps were taken for the economy at that time.
Secondly, those relief steps are set to be withdrawn. One of these is the decision on the interest rate. next month the US the central bank could raise federal reserve interest rates. In such a situation, the Indian markets will not be very beneficial for investing money.
The U.S. dollar will rise. This will increase the weakness in the rupee. That's why investors are returning to the U.S. markets. benchmark US 10-year treasury yields rose sharply, reducing the yield gap between the US and India.
Now, the situation is like FIIs are relocating their assets to the United States because of the dollar's strength over other currencies. This permits homegrown financial investors to buy Indian equities at a flexible discount, bringing about the inconsistency between DII inflows and FII outflows.
All through this fiscal year, the Federal Reserve has been out of a way for the clearing post-pandemic time, remembering a decrease for bond buys.
At last, US 10-year depository yields expanded all the more quickly, shutting the yield divergence between the US and India. This caused FIIs to pull out certain funds, while domestic investors maintained their positions very well, another analyst said.
What to Do now Indian Investors?
Many stock market research analysts said that small investors have a good chance of buying Indian stocks. Hence, it would be the right decision to invest money in the shares of banking and financial companies.
Which countries do people invest money in the Indian Stock Market?
The US has a 34 per cent stake in foreign investors investing money in India. it is followed by Mauritius (11 per cent), Singapore (8.8 per cent), Luxembourg (8.6 per cent), Britain (5.3 per cent), Ireland (4 percent), Canada (3.4 per cent), Japan (2.8 per cent) and Norway and the Netherlands (2.4 per cent).
These 10 countries hold 83 per cent of Indian FPI investment. Coming to equity trading investment, the US accounts for 37 per cent, followed by Mauritius with 11 per cent. Singapore (29 per cent) tops debt investment and Luxembourg (11 per cent) is second.
Key Takeaways
Authorities on the matter agree worldwide that the move would diminish interest rates dissimilarity between the US and developing business markets like India, making them less appealing compared to others.
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