FPI Outflows From India Rise In August, Despite Roll Back Of ‘Super-Rich Tax’
(Photographer: Dhiraj Singh/Bloomberg)

FPI Outflows From India Rise In August, Despite Roll Back Of ‘Super-Rich Tax’

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Foreign portfolio investors pulled out a net amount of Rs 5,920 crore from the Indian capital markets in August even as government rolled back the so-called super-rich tax for foreign and domestic investors last week.

FPI outflows stood at a net Rs 2,985.88 crore in July. Prior to the announcement of the super-rich tax in the Union Budget for 2019-20 in July, FPIs were net buyers for five consecutive months.

The withdrawal from the capital markets (both equity and debt) in August is “contrary to the expectation” since the Centre last week announced revocation of enhanced super-rich tax on foreign and domestic equity investors imposed in the Budget, said Himanshu Srivastava, senior analyst manager research at Morningstar.

According to the latest depositories data, FPIs withdrew a net amount of Rs 17,592.28 crore from equities and pumped in a net sum of Rs 11,672.26 crore in the debt segment, translating into a total net outflow of Rs 5,920.02 crore during Aug. 1-30.

FPIs had infused a net Rs 10,384.54 crore in June, Rs 9,031.15 crore in May, Rs 16,093 crore in April, Rs 45,981 crore in March and Rs 11,182 crore in February into the Indian capital markets.

“Concerns over slowing domestic economy, volatility in the global markets and increased fears of global recession due to escalating trade war tension between U.S. and China overshadowed the positive move of withdrawal of surcharge,” Srivastava added.

Also read: FPI Tax Rollback: No Differential Regime Between Foreign And Domestic Investors, Says CBDT

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