Foreign portfolio investors (FPIs) have sold close to $2.5 million worth equities from the Indian markets in just 32 trading sessions this year. With foreign investors taking risk off the table, India has seen the second- highest outflows this year in Asia after South Korea. So far in 2016, benchmark indices have lost more than 11% ; on Tuesday the Sensex closed at 23191.97 while the broader Nifty closed at 7048.25.
In January, foreign investors has sold $1.7billion. In other Asian countries like South Korea, foreign funds have withdrawn $2.86 billion worth equities, while in Taiwan, they have pulled out $1.24 billion. Thailand has seen $388 million in 2016.
However, domestic investors continue to buy having shopped for stocks worth over R18,000 crore. The rupee weakened by 32 paise on Tuesday and stood at 68.38 against the US dollar.
As per the global fund managers’ survey conducted in January by Bank of America Merrill Lynch (BofA-ML), ‘global investors turning risk averse cut their allocation to equities and raised cash.
A net 38% of survey participants said their allocation to EM equities fell further to record lows since 2006 as they see China growth prospects weakening, deteriorating earnings outlook, the worst since 2002 and expect a challenging macro environment amid a strengthening US dollar and potential higher bond yields.
In 2015, foreign investors brought in slightly over $3.27 billion which was the lowest in four years. In 2013 and 2014 on the other hand, India saw an inflow of over $19 million and $16 million from overseas funds.