BackFPI outflow in India from equities at Rs4,000 crore in December so far
Foreign investors have pulled out more than Rs4,000 crore from the country's stock markets this month so far, mainly due to rising crude prices and widening fiscal deficit
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New Delhi: Foreign investors have pulled out more than Rs4,000 crore from the country’s stock markets this month so far, mainly due to rising crude prices and widening fiscal deficit. The outflow comes following an eight month high inflow of Rs19,728 crore in November, mainly due to the government’s plan to recapitalise PSU banks and surge in India’s ranking in the World Bank’s ease of doing business.
This was the highest net investment by FPIs since March, when they had poured in Rs30,906 crore in the equity market. According to the depositories data, Foreign Portfolio Investors (FPIs) withdrew a net amount of Rs4,089 crore ($634 million) from equities till 8 December. However, such investors had put in over Rs2,200 crore in the debt markets during the period under review.
“Rising crude prices and widening fiscal deficit prompted FPIs to adopt a cautious stance for now. As per the recently released data, India’s fiscal deficit rose to 96.1% of the full-year target by the end of October. The fiscal deficit data, which was released on 30 November overshadowed a resounding GDP growth of 6.3 % for September quarter, which was also released on the same day.
“In addition to that, appreciating rupee and rising domestic markets too provide a good profit booking opportunity to FPIs, especially before Christmas and new year," said Morningstar India’s senior analyst manager (research) Himanshu Srivastava. It has been a tremendous journey for the Indian equity markets in the calendar year 2017.
After taking a break from buying into Indian equities in the months of August and September and returning cautiously in October, FPI’s bought Indian equities in abundance in the month of November. However, they withdrew funds in this month so far. Going ahead, the FPIs can be expected to continue with their cautious approach to invest in Indian equities for the remaining month given the Gujarat elections.
Additionally, they would also be looking for further signs of economic growth before deciding on India allocations, Srivastava said. Even if there are net outflows in December, we will end the year with higher net inflows from FPIs compared to the last two years, he added. Overall, FPIs have invested over ₹ 3,000 crore in equities so far in 2017 and another ₹ 1.5 lakh crore in debt markets.
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