FPIs take out Rs 4,600-cr in Feb on slump in crude prices

This has taken the total outflow to Rs 13,414 crore since the beginning of the year

Overseas investors have pulled out a massive Rs 4,600 crore from the Indian capital markets this month so far, primarily on account of continuous fall in crude oil prices and fears of a global slowdown.

This has taken the total outflow to Rs 13,414 crore ($1.97 billion) since the beginning of the year.

According to the data available with depositories, foreign portfolio investors (FPIs) took out Rs 4,503 crore from equities during February 1-18 while they withdrew Rs 96 crore from debt market during the same period, leading to a net outflow of Rs 4,599 crore ($673 million).

Prior to that, FPIs pulled out a net Rs 13,381 crore from equities while they infused Rs 3,274 crore in debt in January.

Capital inflow by FPIs is often referred to as hot money because of its unpredictability though it continues to remain one of the key drivers of the stock market.

"A major chunk of FPI money are sovereign wealth funds that belongs to wealthy nations. The Middle East region is one the largest suppliers of crude and their revenues in crude were used by their sovereign wealth funds to invest in emerging markets globally," SAS Online.Com Chief Operating Officer (COO) Siddhant Jain said.

"But, due to recent crash in crude oil prices, these wealth funds are now under pressure and are thereby redeeming their investment in emerging markets leading to these huge outflows. This, coupled with the depreciating Indian Rupee and the concern over the health of the Chinese economy have spooked FPIs," he added.

Meanwhile, the benchmark BSE Sensex has plunged by 1,161.54 points or 4.67 per cent during the first three weeks of the month.

In 2015, FPIs had brought in a net Rs 17,806 crore in equities and Rs 45,856 crore in bond markets.