FPIs pull out Rs 6,000 cr from debt market in May

By: |
New Delhi | May 29, 2016 11:08 AM

Foreign investors pulled out close to Rs 6,000 crore from the Indian debt market in May after pumping in huge money in the preceding month.

Capital poured in by FPIs is often referred to as 'hot money' because of its unpredictability although they continue to remain the most important drivers of Indian stock markets. (Reuters)Capital poured in by FPIs is often referred to as ‘hot money’ because of its unpredictability although they continue to remain the most important drivers of Indian stock markets. (Reuters)

Foreign investors pulled out close to Rs 6,000 crore from the Indian debt market in May after pumping in huge money in the preceding month.

However, foreign portfolio investors (FPIs) are bullish on the stock market as they put in Rs 1,495 crore during the same period.

Market experts attributed the outflow to weakening of the rupee. Besides, possible action by the US Federal Reserve has also hit investor sentiment.

“The recent rejig from debt to equity on part of FPIs indicates their strong preference for the Indian growth story. With stocks at an attractive valuation, it makes sense to enter the equity market right now,” SAS Online Chief Operating Officer (COO) Siddhant Jain said.

“Also, the recent changes in Mauritius tax treaty might have prompted FPIs to pull out of debt, step back and consider their tax implications,” he explained.
He further said FPI debt outflow is primarily in corporate bonds, which mainly could be due to bonds maturing.

The data sourced from the depositories showed FPIs have sold debt securities worth Rs 5,986 crore (USD 891 million) till May 27.

The outflow comes after FPIs pumped in Rs 6,418 crore in the debt market last month. Prior to that, overseas investors withdrew a total of Rs 9,671 crore from the segment in February and March.

Moreover, in an auction conducted earlier this month, government debt securities received lukewarm response from FPIs after months of over-subscription.

Capital poured in by FPIs is often referred to as ‘hot money’ because of its unpredictability although they continue to remain the most important drivers of Indian stock markets.

This year, FPIs have invested Rs 14,406 crore in equities while withdrawing Rs 6,925 crore from the debt market, resulting in a net inflow of Rs 7,481 crore.

Get live Stock Prices from BSE, NSE, US Market and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Rakesh Jhunjhunwala made Rs 967 crore from these five stocks in November
2Petrol price crosses Rs 82-mark, diesel above Rs 72 a litre
3NDTV shares: Sebi bars two promoters, other individuals, entities for insider trading activities