Amid concerns over the second wave of the coronavirus pandemic and its possible impact on the Indian economy, overseas investors withdrew Rs 4,444 crore from Indian markets in May.
Between May 1-21, foreign portfolio investors (FPIs) took out Rs 6,370 crore from equities but invested Rs 1,926 crore in the debt segment,as per depositories data.
This resulted in the total net outflow of Rs 4,444 crore.
The concern continues to keep foreign investors on the sidelines and restrain them from investing substantially into the Indian equity markets.
The anxiety pertaining to rising inflation and rising debt levels are keeping emerging markets suppressed.
However, there are signs of improvement in the covid situation in the last two weeks and it has provided some comfort resulting into sharp decline in net outflow amounts.
In April, the total net outflow from the Indian capital markets stood at Rs 9,435 crore.
Amongst emerging markets South Korea and Taiwan saw highest month to date FPI outflows of $825 crore and $344 crore respectively.
Whereas Indonesia saw month to date FPI inflows of $4.6 crore. It is believed that FPI outflows is a temporary phenomenon.
The number of COVID19 cases in the country is showing a downward trend. Vaccination rates are slowly improving and as the economy reopens, FPI investments will escalate.
Bhoi Smrutirekha Dharanidhar