NEW DELHI: Buoyed by India's Lok Sabha election results and attractive valuations of Chinese stocks, foreign investors pulled out nearly Rs 14,800 crore from domestic stocks in the first week of this month.
Election jitters led to net outflows of Rs 25,586 crore in May and changes in India's tax treaty with Mauritius and concerns over the continued rise in US bond yields led to net outflows of over Rs 8,700 crore in April.
Earlier, FPIs had made net investments of Rs 35,098 crore in March and Rs 1,539 crore in February, while they had withdrawn Rs 25,743 crore in January, depository data showed.
From a medium to long-term perspective, the direction of interest rates will continue to be a key driver for foreign investment inflows into Indian equity markets.
According to the data, foreign portfolio investors (FPIs) made a net withdrawal of Rs 14,794 crore this month (till June 7).
The general election results in India significantly influenced the inflows of foreign investors into Indian equity markets in June.Himanshu Srivastava, associate director – manager research, Morningstar Investment Research India, said last week started on an optimistic note as exit polls indicated a decisive victory for the BJP and the NDA government.
However, actual results differed significantly from these expectations, upsetting market sentiment, which triggered mass withdrawals by foreign investors.
He said foreign investors were also concerned that no party could get a clear majority in this parliamentary election, which may have prompted them to adopt a wait-and-see approach.
FPIs consider Indian valuations too high and hence, capital is shifting to cheaper markets.
VK Vijayakumar, chief investment strategist, Geojit Financial Services, said the pessimism of FPIs about Chinese stocks seems to be waning and there is a trend to invest in Chinese stocks listed on the Hong Kong Exchange as valuations of Chinese stocks have become very attractive.On the other hand, FPIs invested more than Rs 4,000 crore in the debt market. Earlier, foreign investors had invested Rs 13,602 crore in March, Rs 22,419 crore in February and Rs 19,836 crore in January.
The inflows were driven by the upcoming inclusion of Indian government bonds in the JP Morgan index.
Market experts believe the long-term outlook for FPI inflows into Indian debt is positive due to India's inclusion in global bond indices.
However, near-term flows are being impacted by global macroeconomic uncertainty and volatility.Overall, FPIs pulled out a net amount of Rs 38,158 crore from equities so far in 2024, however, invested Rs 57,677 crore in the debt market.
Election jitters led to net outflows of Rs 25,586 crore in May and changes in India's tax treaty with Mauritius and concerns over the continued rise in US bond yields led to net outflows of over Rs 8,700 crore in April.
Earlier, FPIs had made net investments of Rs 35,098 crore in March and Rs 1,539 crore in February, while they had withdrawn Rs 25,743 crore in January, depository data showed.
From a medium to long-term perspective, the direction of interest rates will continue to be a key driver for foreign investment inflows into Indian equity markets.
According to the data, foreign portfolio investors (FPIs) made a net withdrawal of Rs 14,794 crore this month (till June 7).
The general election results in India significantly influenced the inflows of foreign investors into Indian equity markets in June.Himanshu Srivastava, associate director – manager research, Morningstar Investment Research India, said last week started on an optimistic note as exit polls indicated a decisive victory for the BJP and the NDA government.
However, actual results differed significantly from these expectations, upsetting market sentiment, which triggered mass withdrawals by foreign investors.
He said foreign investors were also concerned that no party could get a clear majority in this parliamentary election, which may have prompted them to adopt a wait-and-see approach.
FPIs consider Indian valuations too high and hence, capital is shifting to cheaper markets.
VK Vijayakumar, chief investment strategist, Geojit Financial Services, said the pessimism of FPIs about Chinese stocks seems to be waning and there is a trend to invest in Chinese stocks listed on the Hong Kong Exchange as valuations of Chinese stocks have become very attractive.On the other hand, FPIs invested more than Rs 4,000 crore in the debt market. Earlier, foreign investors had invested Rs 13,602 crore in March, Rs 22,419 crore in February and Rs 19,836 crore in January.
The inflows were driven by the upcoming inclusion of Indian government bonds in the JP Morgan index.
Market experts believe the long-term outlook for FPI inflows into Indian debt is positive due to India's inclusion in global bond indices.
However, near-term flows are being impacted by global macroeconomic uncertainty and volatility.Overall, FPIs pulled out a net amount of Rs 38,158 crore from equities so far in 2024, however, invested Rs 57,677 crore in the debt market.
