FPIs pull out net outflow of Rs 22,047 cr from equities in May amid election uncertainty

According to reports, the development came following a net outflow of over Rs 8,700 crore in the entire April on concerns over a tweak in India’s tax treaty with Mauritius and a sustained rise in US bond yields, and before that, Foreign Portfolio Investors (FPIs) made a net investment of Rs 35,098 crore and Rs 1,539 crore in March and February respectively.

FPIs are likely to buy in India as clarity emerges on the election front, since they cannot afford to miss the post-election results rally.

Foreign Portfolio Investors (FPIs) witnessed a net outflow of Rs 22,047 crore from equities this month, till May 24, according to data with depositories.

Experts said this heavy selling was triggered by the massive outperformance of Chinese stocks and election-related jitters.

The Hang Seng index, dominated by Chinese stocks surged 7.66 percent during the last month.

FPIs reportedly invest through the Hong Kong market since there are restrictions on investing through the Shanghai market.

According to experts, with the uncertainty surrounding the outcome of on-going general polls in the country, foreign investors at this point are wary of entering the Indian equity markets before the announcement of election results.

On the flip side, FPIs invested Rs 2,009 crore in the debt market during the period under review.

Before this outflow, foreign investors put in Rs 13,602 crore in March, Rs 22,419 crore in February, Rs 19,836 crore in January, according to reports.

Experts said this inflow was influenced by the upcoming inclusion of Indian government bonds in the JP Morgan Index.

Overall, FPIs have withdrawn a net amount of Rs 19,824 crore in equities in 2024 so far, and invested Rs 46,917 crore in debt market, as per reports.