<p>Continuing their selling spree for the sixth consecutive month, foreign investors pulled out a massive Rs 41,000 crore from the Indian equity market in March in anticipation of rate hikes by the US Federal Reserve and the deteriorating geopolitical environment amid the Russia-Ukraine war.</p>.<p>Further, flows from foreign portfolio investors (FPIs) are expected to remain volatile in the near term given the headwinds in terms of elevated crude prices and inflation, experts said.</p>.<p>According to data available with the depositories, FPIs were net sellers to the tune of Rs 41,123 crore in the equity market last month.</p>.<p>This was way higher than net withdrawals of Rs 35,592 crore in February and Rs 33,303 crore in January.</p>.<p>Foreign investors have been withdrawing money from equities for the last six months, pulling out a net Rs 1.48 lakh crore between October 2021 and March 2022.</p>.<p><strong>Also Read | <a href="https://www.deccanherald.com/business/business-news/nine-of-top-10-firms-gain-rs-191-lakh-cr-in-m-cap-ril-infosys-biggest-winners-1090839.html" target="_blank">Nine of top-10 firms gain Rs 1.91 lakh cr in m-cap; RIL, Infosys biggest winners</a></strong></p>.<p>Commenting on the latest outflow, Atanuu Agarrwal, co-founder, UpsideAI, said "the primary reason remains the changing interest rate environment and the Fed's signal to end the stimulus."</p>.<p>"There are multiple other reasons -- India is expensive, crude has shot up, INR is weak, Russia-Ukraine conflict leads to a flight to safety. But all things being equal, if the Fed had signalled a delay in raising rates, we may not have seen a sale of this scale," he added.</p>.<p>Making similar arguments, Himanshu Srivastava, Associate Director - Manager Research, Morningstar India, said the outflows can be attributed to the anticipation of a rate hike by the US Fed, and deteriorating geopolitical environment with Russia and Ukraine engaging in a war.</p>.<p>Nikhil Kamath, co-founder, True Beacon and Zerodha, said India looks expensive on a relative basis, and FPIs could be rebalancing into China and other opportunities by reducing their India exposure.</p>.<p>Cyclically, this is the first time we have noticed a prolonged inverse correlation between FPI flows and Nifty, he added.</p>.<p>Apart from equities, the debt market saw net outflows to the tune of Rs 5,632 crore in March.</p>.<p>Srikant Chouhan, Head - Of equity Research (Retail), Kotak Securities, said global markets have noted progress in Russia-Ukraine negotiations and are hoping for gradual normalisation.</p>.<p>Equity markets were strong globally, while commodities witnessed some correction from elevated levels.</p>.<p>"However, given the headwinds in terms of elevated crude prices, inflation, etc FPI flows are expected to remain volatile in the near term," he added.</p>.<p>Apart from India, other emerging markets such as Taiwan, South Korea and the Philippines too witnessed FPI outflows in March.</p>.<p>Recently, the US Fed increased its policy rate for the first time since 2018, by a quarter percentage point, thus finally ending its ultra-easy pandemic-era monetary policy and indicating more rate hikes this year.</p>.<p>The war between Russia and Ukraine too continues. Therefore, under the given fast-changing global landscape, foreign flows into Indian equities could shift either way depending on how the underlying scenario changes, Morningstar India's Srivastava said. </p>.<p><strong>Watch the latest DH Videos here:</strong></p>
<p>Continuing their selling spree for the sixth consecutive month, foreign investors pulled out a massive Rs 41,000 crore from the Indian equity market in March in anticipation of rate hikes by the US Federal Reserve and the deteriorating geopolitical environment amid the Russia-Ukraine war.</p>.<p>Further, flows from foreign portfolio investors (FPIs) are expected to remain volatile in the near term given the headwinds in terms of elevated crude prices and inflation, experts said.</p>.<p>According to data available with the depositories, FPIs were net sellers to the tune of Rs 41,123 crore in the equity market last month.</p>.<p>This was way higher than net withdrawals of Rs 35,592 crore in February and Rs 33,303 crore in January.</p>.<p>Foreign investors have been withdrawing money from equities for the last six months, pulling out a net Rs 1.48 lakh crore between October 2021 and March 2022.</p>.<p><strong>Also Read | <a href="https://www.deccanherald.com/business/business-news/nine-of-top-10-firms-gain-rs-191-lakh-cr-in-m-cap-ril-infosys-biggest-winners-1090839.html" target="_blank">Nine of top-10 firms gain Rs 1.91 lakh cr in m-cap; RIL, Infosys biggest winners</a></strong></p>.<p>Commenting on the latest outflow, Atanuu Agarrwal, co-founder, UpsideAI, said "the primary reason remains the changing interest rate environment and the Fed's signal to end the stimulus."</p>.<p>"There are multiple other reasons -- India is expensive, crude has shot up, INR is weak, Russia-Ukraine conflict leads to a flight to safety. But all things being equal, if the Fed had signalled a delay in raising rates, we may not have seen a sale of this scale," he added.</p>.<p>Making similar arguments, Himanshu Srivastava, Associate Director - Manager Research, Morningstar India, said the outflows can be attributed to the anticipation of a rate hike by the US Fed, and deteriorating geopolitical environment with Russia and Ukraine engaging in a war.</p>.<p>Nikhil Kamath, co-founder, True Beacon and Zerodha, said India looks expensive on a relative basis, and FPIs could be rebalancing into China and other opportunities by reducing their India exposure.</p>.<p>Cyclically, this is the first time we have noticed a prolonged inverse correlation between FPI flows and Nifty, he added.</p>.<p>Apart from equities, the debt market saw net outflows to the tune of Rs 5,632 crore in March.</p>.<p>Srikant Chouhan, Head - Of equity Research (Retail), Kotak Securities, said global markets have noted progress in Russia-Ukraine negotiations and are hoping for gradual normalisation.</p>.<p>Equity markets were strong globally, while commodities witnessed some correction from elevated levels.</p>.<p>"However, given the headwinds in terms of elevated crude prices, inflation, etc FPI flows are expected to remain volatile in the near term," he added.</p>.<p>Apart from India, other emerging markets such as Taiwan, South Korea and the Philippines too witnessed FPI outflows in March.</p>.<p>Recently, the US Fed increased its policy rate for the first time since 2018, by a quarter percentage point, thus finally ending its ultra-easy pandemic-era monetary policy and indicating more rate hikes this year.</p>.<p>The war between Russia and Ukraine too continues. Therefore, under the given fast-changing global landscape, foreign flows into Indian equities could shift either way depending on how the underlying scenario changes, Morningstar India's Srivastava said. </p>.<p><strong>Watch the latest DH Videos here:</strong></p>