Foreign investors have pulled out ₹1.5 lakh crore

It has been reported that this year, foreign investors have retrieved about ₹1.5 lakh crore from the Indian markets including equity, debt, and hybrid assets. Also, during the same period, Sensex plunged by 9%. The massive sell-off in 2022 is more aggressive than last year as FIIs in the year 2021 had invested ₹50,088 crores in the Indian markets.

Since FIIs are significant investors in growing markets like India, an aggressive FII sell-off has the potential to make investors worry about the market conditions. However, on the other hand, domestic institutional investors (DIIs) have been investing constantly. Domestic institutional investors are institutions like insurance companies, mutual fund houses, pension funds, or provident funds.

Additionally, the market trends look to get worse as even systematic investment plan (SIP) inflows have declined in the month of April indicating the low interest of investors.

One of the major reasons behind FII pulling out funds from the Indian markets is said to be the increase in interest rate by the US central bank in a bid to limit inflation caused by the disruptions in the supply chain. Disruptions in the supply chain are major because of the Russia Ukraine war, after-effects of Omicron, and other factors resulting in a surge in inflation and economic slowdown.