New Delhi: Foreign portfolio investors (REITs) withdrew as much as Rs 17,537 crore from Indian markets in just three trading sessions in March as investor sentiment was rocked by conflict-triggered uncertainty Russian-Ukrainian and rising crude oil prices.
According to custodian data, they withdrew Rs 14,721 crore from equities, Rs 2,808 crore from debt segment and Rs 9 crore from hybrid instruments between March 2-4.
This brought the total net outflow to Rs 17,537 crore.
“Market sentiments have been impacted globally by the uncertainty triggered by the war and the crude oil boom,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services.
Additionally, they were also sellers in the debt segment, amid a depreciated rupee.
According to Himanshu Srivastava, Associate Director – Manager Research, Morningstar India, geopolitical tension of such magnitude does not bode well for emerging markets like India when it comes to foreign flows.
High valuations in Indian stock markets, risk to corporate earnings and slow economic growth have prevented foreign investors from investing heavily in Indian stock markets, he said.
“But the pace of fund outflows increased sharply after the U.S. Fed decided to roll back stimulus and raise interest rates sooner rather than later. Outflows accelerated further due to the war. between Russia and Ukraine,” he added.
Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities Ltd, said: “Reit flows into emerging markets in February 2022 were positive, with the exception of India. Indonesia, the Philippines, South Korea and Thailand recorded flows to the tune of $1,220 million, $141 million, $418 million and $1,931 million, respectively,”
REIT flows are expected to be volatile in the coming months, due to the ongoing Russian invasion of Ukraine and its fallout in the form of sanctions, high inflation and likely rising interest rates. interest by the Fed, he said.