Russia - Ukraine War and how it is affecting FPIs in India
Russia invaded Ukraine on 24 February 2022, this ongoing war between the two countries has proven to be destructive and disruptive for the whole world.
It has resulted in Europe's largest refugee crisis since World War II. This military aggression by Russia in Ukraine's territory has hampered the production and trade leading to supply shortages and inflation worldwide as a result, currently, the market condition is not that optimistic.
The stock markets throughout the world have been adversely affected. Particularly in India, it can be seen that many foreign portfolio investors (FPIs) are withdrawing their funds from the Indian stock market.
Foreign portfolio investment (FPI) refers to investing in the financial assets of a foreign country, such as stocks or bonds available on an exchange.
Recently, for the sixth consecutive month, foreign portfolio investors pulled out a massive Rs 41,000 crore from the Indian equity market in March on anticipation of rate hikes by the US Federal Reserve and deteriorating geopolitical environment amid the Russia-Ukraine war. Hence, there is a significant decline in FPIs.
It is speculated that in the near future flows from the foreign portfolio investors will remain volatile due inflations and other disruption in the Indian economy caused due to the Russia-Ukraine War.
Written By:
Padmaja Uttarwar