Foreign portfolio investors (FPIs) have withdrawn close to $2 billion worth of stocks from India in 2016 so far. Foreign investors have turned risk averse with the increasing fears of a global slowdown, concerns over China’s slowing economy, according to experts.
“FPI selling has been unabated from the start of the year and on the same hand DIIs have also turned alert. There is clearly a lack of buying in the last few months, people are reluctant to pour in additional money”, said Rikesh Parikh, vice president, institution corporate broking, Motilal Oswal Financial Services.
On Thursday, the 50-stock index Nifty, was at its lowest since May 2014 sliding 239.35 points, nearly 3.32% and closed at 6976.35 points while the Sensex dropped 807.07 points and stood at 22,951.83 points falling 3.40% lower than its opening. Domestic investors were seen selling off over Rs 1,222 crore worth equities while foreign investors trimmed nearly $163 million worth equities on the same day.
In its recent report on FPI outflows, ICICI Securities stated, FPI’s have chased quality stocks in the past, the current sell-off provides long term investment opportunities in quality stocks which have seen FPI selling. However, the risk aversion mind set of retail investors could hinder the pace of robust DII flows.
Earlier Andrew Holland, CEO of Ambit Investment Advisors, had noted that, FPI sell-off was due to risk aversion by foreign investors. Global fears are the biggest reason behind FPI selling in recent past. Foreign funds have offloaded their exposure across the emerging markets over concerns about China and falling crude oil prices. In January FPIs sold $1.7-bn equities from the Indian markets, while FPIs cut down their funds from other Asian markets like South Korea saw an exit of nearly $2.4 billion, Taiwan had $1.4 billion withdrawn by foreign funds, India accounted to nearly 10% outflows of foreign funds from the overall Asian markets.