Thursday, March 30, 2023

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Bullish retail investors shield markets from FPI sell-off in 2022

MUMBAI: Dalal Street will remember 2022 as the year when, in the face of a global bearish onslaught, domestic investors triumphed over the worst selling by foreign funds in India’s history.
On Friday, the sensex closed the day with a loss of 293 points, or 0.5%, at 60,841. But it ended the calendar year up nearly 2,600 points, or 4.4%, becoming one of the best performing indices among large economies (see graphic).


Consider this: Even as foreign portfolio investors (FPIs) net sold Indian stocks worth over Rs 1.2 lakh crore, domestic mutual funds (MFs) have more than made up for that with their net buying figure at about Rs 1.8 lakh crore, official data showed. The huge buying by MFs was because, during the year, retail investors pumped in Rs 12,162 crore on an average every month through the systematic investment plan (SIP) route. According to fund industry players, 95% of the SIP money goes into the stock market through equity schemes.
A similar trend was witnessed in 2021 as well – MFs were net buyers at about Rs 77,000 crore compared to FPI‘s net buying of about Rs 26,000 crore. In 2022, the trend, however, showed a stronger divergence in favour of MFs.
The year also witnessed extreme volatility, thanks mainly to the Russia-Ukraine war that started in February, which pulled the sensex down to below the 55k mark. The war also played havoc with crude prices, which touched a multi-year high of $120-per-barrel.
In addition to the war in Europe, the galloping inflation in India and abroad, the race among most major central banks to raise rates to fight the runaway price rise, the subsequent selloff in several markets and the series of setbacks for the crypto industry weighed on investor sentiment. However, despite all the negative factors that affected the market, for the index the 60k level remained the mid-point around which it hovered.
HDFC Securities MD & CEO Dhiraj Relli said key developments that marketmen should track in 2023 would be state elections, Union Budget, RBI’s stance, trends in trade & fiscal deficit, inflation moves, and global geopolitical situation.

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