The inflow of Rs 9,089 crore in May comes following a net withdrawal of Rs 6,883 crore in April and Rs 61,973 crore in March, on fears of a coronavirus-induced global recession. (File Photo)
After pulling out more than Rs 68,000 crore in March and April, FPIs have infused over Rs 9,000 crore into the Indian equity market in May so far, amid volatile stock movement and a mega block deal involving Hindustan Unilever. However, debt markets have witnessed FPI outflows of Rs 19,892 crore in May so far, taking the total FPI outflows from debt to Rs 1,02,371 crore in the January-May period.
The inflow of Rs 9,089 crore in May comes following a net withdrawal of Rs 6,883 crore in April and Rs 61,973 crore in March, on fears of a coronavirus-induced global recession. Prior to that, foreign portfolio investors (FPIs) had put in over Rs 1,820 crore in February and Rs 12,123 crore in January.
Foreign investors have pulled out a combined Rs 1,32,410 crore from equity and debt since January this year. FPIs, who took out Rs 45,825 crore from equity market in the January-May period, will keep a close watch on how India manages to keep COVID-19 cases under check with relaxations in lockdown curbs and how quickly it revives growth.
“The equity market may experience a deterioration in investor sentiment, given the already high expectations, and flows from foreign portfolio investors and domestic investors are likely to abate in the near term because of the prospects of reduced income levels and corporate profits,” Credit Suisse said in a report.
“We continue to maintain our defensive stance on Indian equities with a preference for sectors linked to agriculture, telecoms, information technology, and certain consumer and utility stocks from a 3-6 month perspective,” it said.
“While the near-term outlook for financials is still weak, we believe any further sharp correction or panic selling in quality financials could offer a good buying opportunty from a 2-3 year perspective,” Credit Suisse said. FPI flows are less likely to come to India given the dwindling growth environment, it added.
According to a CARE Ratings report, FPI outflows to some extent have had a bearing on the rupee-dollar exchange rate. “Phase-wise analysis shows that the outflows in case of FPIs were severe prior to the announcement of the lockdown vis-à-vis post announcement. Monetary stimulus, fiscal relief measures and conditional relaxations in the second phase of the lockdown for resumption of economic activities to some extent eased to an extent the negative sentiments of foreign investors during phase 1 and phase 2 of the nation-wide lockdown,” it said.
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FPI flow to equity turns positive; debt outflows of Rs 19.8K crore in May - The Indian Express
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