Overall, so far in May, the FPI outflow in the Indian market (including equity, debt, debt-VRR, and hybrid) stood at  ₹6,745 crore. (Bloomberg)

Fpis emerge as net sellers in the first week of May and withdraw ₹6,417 Cr in the stock markets

Foreign portfolio investors (REITs) emerged as net sellers in the first week of May with a sharp sell-off in the equity market amid global inflation concerns, monetary policy tightening and uncertainties over the Russian-Ukrainian war continued to cloud sentiment leading to volatility.

From May 2 to 6, foreign investors pulled out 6,417 crores in the stock market, according to data provided by NSDL. So far this year, REITs have only been net sellers of equities. In April 2022, outflow from REITs amounted to 17,144 crore in this market.

The exit of REITs from the equity market stood at 41,123 crore in March 2022, when it was at 35,592 crores in February and 33,303 crores in January this year.

Meanwhile, REITs were sellers in the debt market with an outflow of 1,085 crore from May 2-6, while a slight selloff of 9 crores were recorded in the hybrid market. In contrast, the debt-VRR market saw an influx of 767 crores in the first week of May.

Overall, so far in May, REIT outflows in the Indian market (including equities, debt, debt-VRR and hybrid) amounted to 6,745 crore.

It will be closely watched if further weeks in May see the bears release. 2022 has therefore been a volatile year, with REITs being net sellers.

In April 2022, globally, REITs exited 22,688 crore is even less compared to the release of 50,068 crores in March. The exit was at 38,068 crores and 28,526 crores in February and January this year.

In India, markets were shocked last week by the sudden surprise of RBI’s 40 basis point hike in the repo rate to 4.4%. This was earlier than expected, hinting at the severity of the surge in inflation and raising further concerns about the resumption of economic growth which has been hit due to the pandemic. RBI strives to ensure sufficient liquidity. RBI’s policy approach appears to be leaning towards a hawkish stance amid inflationary pressures, like other central banks around the world. The US Federal Reserve and the Bank of England also raised their key rates to combat runaway inflation.

Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said: “As markets have become very weak globally, REITs may continue to sell, perhaps with reduced volume. Even after the recent market correction, valuations are not cheap. Perhaps if Nifty corrects another 5% from current levels, REITs are likely to turn buyers. With aggressive Fed tightening, lockdowns in China and the ongoing war in Ukraine, the situation is not favorable for a sharp turnaround in the markets.”

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