A shopkeeper counts cash in a shop in India. (Photographer: Anindito Mukherjee/Bloomberg)

FPIs’ Bearish Stance Continues: Net Outflow At Rs 14,500 Crore In June So Far

Foreign investors have pulled out over Rs 14,500 crore from the Indian capital markets this month so far, primarily due to global trade war and hawkish commentary by the U.S. Federal Reserve.

The latest outflow has taken the total net withdrawal by foreign portfolio investors from the capital markets (equity and debt to more than Rs 46,600 crore in this year so far, according to the latest data available with the depositories.

FPIs withdrew a net sum of Rs 5,360 crore from equity markets, while they pulled out net amount of Rs 9,219 crore from the debt markets between June 1 and June 22, thereby resulting in a total outflow of Rs 14,579 crore.

This comes following a net outflow of over Rs 45,000 crore from equity and debt together during last two months. Prior to that, FPIs had pumped in Rs 2,600 crore in March.

Also read: FPI Outflow Hits 18-Month High At Rs 29,714 Crore In May

"Investors were concerned as it was reported that U.S. President Donald Trump approved tariffs on about $50 billion of Chinese goods," said Abhijeet Dey, senior fund manager – equities at BNP Paribas Mutual Fund.

Also read: Shanghai Stocks Hit Lowest Since 2016 as Trump Tariff List Looms

"Further, the sentiments were dampened due to rate hike and the hawkish commentary by the U.S. Federal Reserve," said Jayant Manglik, president at Religare Broking Ltd.

However, Indian equities had seen some buying from FPIs in the first week of June 2018 on the back of easing global oil prices from their highs.

“The easing was premised on expectations that global crude output will increase by at least 1 million barrels per day post the June 22 OPEC meeting of members and Russia,” said Ajay Bodke, CEO and chief portfolio manager at PMS Prabhudas Lilladher.

Also read: Oil Bounces as OPEC Adopts Underwhelming Production Increase

Further, Bodke said that the fourth quarterly results also pointed to revival in corporate earnings (barring corporate focused public and private sector banks) with volume growth in double digits in many sectors such as FMCG, retail and auto, among others.