Foreign investors look to exit India, withdraw $6.4 billion
Foreign investors turner net sellers in March quarter and pulled out USD 6.4 billion from the Indian equity markets largely due to the COVID-19 outbreak and ensuing risk-averse environment, a Morningstar report said. In comparison, foreign portfolio investors (FPIs) bought net assets worth USD 6.3 billion in three months ended December 2019. FPIs were net buyers in January (USD 1.71 billion) and February (USD 265 million).
They, however, went on a selling spree in March as they sold net assets worth USD 8.4 billion. “The uncertainty over the gravity of the pandemic’s impact on the global economy and financial markets worldwide triggered a flight to safety among foreign investors as they rushed to exit from relatively riskier investment destinations, such as emerging markets like India,” the report noted.
FPIs had started the quarter on a cautious note on account of brewing geopolitical tension between US and Iran and fast-changing trends in US-China trade situation. But they had gradually regained their risk appetite as these concerns started to wane, it said.
Such investors went on a buying spree in the Indian equity markets after the US and China signed a trade deal, thus putting the trade war between them on a pause. Further, positive sentiments around the budget and the Reserve Bank of India‘s (RBI) decision to maintain an accommodative stance in its monetary policy continued to attract foreign investments.
However, as the COVID-19 pandemic started to tighten its noose across the globe, foreign investors turned risk-averse, it said. Cumulatively for the March quarter, FPIs were net sellers in the Indian equity markets to the tune of USD 6.4 billion, which is in sharp contrast to the previous quarter, when they bought net assets worth USD 6.3 billion.
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