FPI outflow hits five-month high of Rs 110 billion in February

Foreign investors pulled out over Rs 110 billion from Indian stocks in February, making it the largest outflow in five months, primarily due to better opportunities in other emerging markets.

This is against the total inflow of Rs 137.81 billion by foreign portfolio investors (FPIs) in the Indian equity markets in January.

"FPIs have pulled out of the Indian markets as they seem to be favouring other emerging markets like Brazil. Besides, global cues could be another reason for the outflow," NSE Managing Director and CEO Vikram Limaye said.

According to the latest data available with the depositories, the FPIs withdrew a net amount of Rs 110.37 billion from equities last month.

This is the highest net outflow by FPIs since September 2017, when they had pulled out Rs 113.92 billion from the Indian equity markets.

Besides, the overseas investors withdrew a net amount of Rs 2.53 billion from the debt markets during February 2018.

"In January, the US unemployment rate stood at a 17-year low of 4.1 per cent. In addition to this, there is a good possibility of an increase in the US Federal Reserve rate to counter the rise in inflation. Overall, we witnessed a sell-off globally. The FPI pullout from Indian markets is most likely a result of this," said Harsh Jain, co-founder and COO of online investment platform Groww.

Echoing similar views, Nalini Jindal, chief investment advisor at Intellistocks, said the US inflation is hitting several years low, raising possibility of a hike in the Fed rate, and this has resulted in a caution among FPIs.

"This outflow, however, could be a short-term scenario as India is one of the much sought after destinations for investments by FPIs," she added.
 

Further, renewed concerns that a rebound in global crude oil prices will have an adverse impact on fiscal deficit too kept market participants cautious, she said.