Foreign investors pull out £1.76 billion from Indian markets in 17 days Pedestrians watch share prices on a digital broadcast as they stand outside the Bombay Stock Exchange (BSE) in Mumbai on September 24, 2021. Foreign investors have been net sellers in Indian equity markets during December. (Photo by PUNIT PARANJPE/AFP via Getty Images)
FOREIGN portfolio investors (FPIs) pulled out Rs 176.96 billion (£1.76 bn) from the Indian markets during the month till Friday (17).
The flight of foreign money is attributed to expectations of faster tapering by the US Federal Reserve and the Omicron variant of the coronavirus.
According to data from depositories, FPIs took out Rs 134.70 bn (£1.34 bn) from equities, Rs 40.66 billion (£410 million) from the debt segment and Rs 1.60 bn (£16m) from hybrid instruments between December 1 and 17.
In November, FPIs were net sellers to the tune of Rs 25.21 bn (£250m) in Indian markets.
Uncertainties continue on the global as well as domestic fronts, said Himanshu Srivastava, associate director (manager research) at Morningstar India.
The highly transmissible Omicron variant has impacted the global growth outlook, he added.
“Also, the economic growth has also been relatively slow, and India’s earnings have not grown much,” he added.
If the situation worsens, it could further prompt them to redeem investments from emerging markets like India which are considered to be more prone to turmoil in the global markets.
“Since banking constitutes the largest FPI holding, it is bearing the brunt of FPI selling,” V K Vijayakumar, chief investment strategist at Geojit Financial Services, said.
Sustained FPI selling has made high-quality banking stocks attractive from the valuation perspective, he added.
On other emerging markets, Shrikant Chouhan, head, equity research (retail), Kotak Securities, pointed out that South Korea, the Philippines, Taiwan, Thailand and Indonesia, witnessed inflows of foreign money.
“FPI flows are expected to remain volatile given key events such as upcoming state elections (in India) and monetary tightening by developed countries,” he added.