Flight of Foreign Portfolio Investors (FPI)

Till todate, Foreign Portfolio Investors (FPI) have pulled out Rs.212,966 crores from stock markets in 2022

                                                                                         Source : SEBI / NSDL

This pull off by FPI is one of the major reason for fall in stock market by 14% in 2022

                                                   

                                                                                         Movement of stock market in 2022

What has triggered this pull off by FPI from Indian stock markets?  

• Inflation in USA and subsequent interest rate hikes (total 1.5% in 2022), triggered flight of capital from emerging markets to USA.  This resulted in FPIs pulling out funds from India to USA
• Anticipation of further rate increases by USA also made FPI pull out money from India.  
• Depreciation of Rupee by 5% in 2022 is triggering FPI outflow as they find it more attractive to invest in USD than in INR

Will stock market continue to decrease?

Markets will be volatile in the short term considering the economic situation currently.  It is best to stay invested and continue with Systematic Investments to reap long term benefits as markets will re-bound once economy recovers (time frame 1 to 2 years).