Overseas investors took out around Rs 1,730 crore from the Indian markets in May, turning out to be net sellers for the second straight month. The Foreign Portfolio Investors (FPIs) pulled out the money as the second wave of the COVID-19 pandemic spooked investors' sentiment.
The overall net outflow from the Indian capital markets, both equity and debt, was at Rs 9,435 crore in the month of April.
FPIs withdrew Rs 3,375.2 crore from equities, but invested Rs 1,645.8 crore in the debt segment between May 1 and May 28, as per the depositories data. This took the overall net outflow to Rs 1,729.4 crore.
However, Morningstar India Associate Director (Manager Research) Himanshu Srivastava told PTI that FPI flows into the Indian equity markets have been showing signs of stabilisation over the past two weeks, after witnessing significant net outflows for eight weeks in a row.
Kotak Securities Executive Vice-President (Equity Technical Research) Shrikant Chouhan said most emerging and Asian markets have seen FPI outflows this month to date.
"South Korea and Taiwan saw the highest month-to-date FPI outflows of $8.5 billion and $3.13 billion, respectively. On the contrary, Indonesia saw month-to-date FPI inflows of $103 million. Notably, concerns of rising inflation and rising debt levels are keeping emerging markets suppressed," he told the agency.
Falling coronavirus cases in India and signs of improvement in the overall situation is a positive sign, said Srivastava.
Also, waning concerns about any severe impact of the second wave of the pandemic on the economy would help foreign investors get their confidence back on Indian equities, he further added.
Mass vaccination in India remains a challenge, which will not be solved immediately, said Groww co-founder and Chief Operating Officer Harsh Jain.
After August, when greater doses of vaccines become available in India, the number of those vaccinated may be expected to climb steadily, leading to easing of restrictions of all kinds, he said.
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