CHART OF THE WEEK 📈
This year, foreign outflows from the Indian markets have been the maximum ever, bringing foreign ownership in the Indian markets down to 18%, which is more than a five-year low.
The offsetting factor has been strong domestic inflows, which has helped the markets lose lesser value compared to other markets, and at a slower pace. But to say that domestic buying completely offsets foreign selling is quite a myth.
In 2022 so far, FPIs have pulled out Rs. 1.98 lakh crore from the Indian markets. The maximum selling was seen in Metals - FPIs reduced their holding by as much as 27% in just the last two months. On the other hand, foreign shareholding increase in the Auto sector by 3% - the only sector to see an increase.
The performance of sectors has been in perfect tandem with the percentage reduction in foreign shareholding. In other words, more the foreign selling pressure in a sector, more has been the downfall in stock prices - a phenomena the Indian markets have seen historically, and which continues even now!