Foreign Investors have Pulled out Significant Amount of Money this Year

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Foreign Investors have Pulled out Significant Amount of Money this Year
26 May 2022
6 min read

News Synopsis

Foreign institutional investors, or FIIs, withdrew more money from Indian markets in the first five months of 2022 than they brought in the previous 12 years, from 2009 to 2021, indicating the severity of the selloff. The 2022 selloff has been so bad that the 2021 selloff – which saw foreign investors withdraw over 91,000 crore – pales in comparison.

India faced a deadly second wave of the Covid-19 pandemic in the year 2021. It was thought that 2022 would be the year of full economic activity, but FIIs appear to think otherwise. So far, FIIs have pulled out over Rs. 2,15,000 crore in 2022. One of the reasons for the selloff could be rising interest rates around the world.

This could be the driving force behind FIIs withdrawing funds from risky markets such as India and investing in the United States, which has seen interest rates rise after printing trillions of dollars through quantitative easing during the pandemic years.

Even though the Indian stock markets have been volatile in recent weeks, the year-to-date performance is not as bad as it appears.

TWN In-Focus