Why has the FII selling been so aggressive in December 2021 in Indian markets?

FII selling has been aggressive in the month of December 2021, which is hardly surprising considering the hawkish tone of the US Fed and the rising bond yields in India. To add to this, the Omicron situation has also been worsening. For the month of December 2021 alone, the FPI selling was to the tune of nearly $3.7 billion from Indian markets.

This the largest single month portfolio outflow since pandemic began in Apr-20. The good news is that the LIC IPO next year and a slew of other digital IPOs like Delhivery, PharmEasy and Snapdeal could keep the FIIs interested resulting in positive IPO flows. There were risk-off flows out of EMs and into dollar assets and that hit India in December.