India witnessed an outflow of more than $ 460 million from listed foreign funds in May, taking the total to $ 2 billion this year.
The listed funds — passive exchange-traded funds (ETFs) and active non-ETFs — account for a large part of foreign portfolio investor (FPI) activity in India.
“Listed fund flows to India recorded outflows worth $ 0.46 billion despite net FPI activity for the month being positive. Most of the listed fund redemptions could be attributed to ETFs. Both India-dedicated and EM-based passive funds saw selling,” said a Kotak Institutional Equities report.
India saw outflows worth $ 406 million from ETFs while non-ETFs pulled out USD 56 million during the period.
Despite the listed funds outflow, the FPI activity in the region remained upbeat as other participants remained active, it added.
The report, which offers a comprehensive view on fund flows of listed funds into India and other emerging markets, said both emerging market as well as India-dedicated passive funds sold equities in May.
A total of $ 270 million was pulled out from India-dedicated funds in May and EM-based funds saw an outflow to the tune of $ 185 million.
“Active Asia excluding-Japan funds increased their exposure to India (13.9 per cent in May from 13.5 per cent in March) even as global emerging market funds remain cautious,” the report noted.