Foreign Investors Stay Bearish On India, Pull Out $5 Billion In October So Far

Foreign investors have pulled out a massive Rs 35,600 crore (about $5 billion) from the Indian capital markets this month on concerns over rupee depreciation, global trade war woes and rising crude oil prices.

The latest outflow is higher than Rs 21,000 crore net withdrawals seen in the entire September. Prior to that, overseas investors had invested a net Rs 7,400 crore in the capital markets (both equity and debt) in July-August.

According to the latest depository data, foreign portfolio investors sold equities to the tune of Rs 24,186 crore so far this month and bonds worth Rs 11,407 crore, taking the total to Rs 35,593 crore ($4.8 billion).

FPIs have been net sellers almost throughout this year barring a couple of months such as January, March, July and August. In these four months, overseas investors have put funds totalling over Rs 32,000 crore. However, analyst suggest that the withdrawal of funds in October has shaken the market.

So far this year, FPIs have pulled out a total of Rs 97,000 crore from the capital markets. This includes over Rs 37,000 crore from equities and close to Rs 60,000 crore from the debt markets.

According to Rahul Mishra of Emkay Global Financial Services, macro issues like liquidity crunch created post IL&FS default, Indian currency move and volatility in crude oil price have kept the investors at bay.

“The continued selling pressure from FPIs needs to be looked from the angle of what is happening globally,” said R Sreesankar, co-head of equities at Prabhudas Lilladher. “From the Indian context, the current issues faced by the NBFCs (non-banking finance companies) isn't helping either.”