Foreign investors pulled out ₹22,000 crore from Indian equities in May due to election uncertainty

From The Hindu Business Line: 2024-05-26 03:06:37

Foreign investors have withdrawn ₹22,000 crore from Indian equities this month due to election uncertainty and Chinese market outperformance. Net outflow in April was over ₹8,700 crore, amid concerns over tax treaty changes with Mauritius. FPIs are expected to buy post-election results rally.US rates stance may also impact FPI flows.

Election-related jitters and US rate hike concerns may have influenced FPI selling. Foreign investors are cautious to enter Indian equity markets before election results. US Fed’s indication of no rate cuts has led to dollar appreciation and surge in US Treasury yields, affecting emerging markets like India.

Despite the outflow in equities, FPIs invested ₹2,009 crore in the debt market during this period. Long-term outlook for FPI flows into Indian debt is positive due to global bond index inclusion. Near-term flows impacted by macroeconomic uncertainties. Trend expected to reverse with clearer interest rate outlook.

JP Morgan’s inclusion of Indian government bonds in its benchmark emerging market index from June 2024, projected to attract $20-40 billion in 18-24 months. FPIs have withdrawn ₹19,824 crore from equities in 2024, but invested ₹46,917 crore in the debt market. Foreign investors cautious due to election uncertainty and global economic concerns.



Read more at The Hindu Business Line: FPIs take out ₹22,000 crore from equities in May amid poll jitters, Chinese mkt outperformance