scorecardresearch

Will March 2020 see highest FPI withdrawal in history? Foreign investors shy away from India

In the half-month of March, the foreign investors have pulled out nearly Rs 38,000 crore from the Indian market.

Will March 2020 see highest FPI withdrawal in history? Foreign investors shy away from India
FTSE has now proposed implementing the changes in the September 2020 FTSE global equities index series semi-annual review, subject to confirmation by the end of June 30.

Foreign portfolio investors have heavily pulled out their investments (FPI) from the Indian market in the month of March. In the half-month of March, FPI withdrawal has been up to nearly Rs 38,000 crore, according to National Securities Depository Limited (NSDL). The FPI withdrawal in the half-month of March is so far the highest withdrawal since the full month FPI withdrawal of Rs 38,906 crore in October 2018. In January and February 2020, FPI of Rs 957 crore and Rs 8970 crore respectively were received in India. The high FPI withdrawal is primarily on the back of the volatile share market due to the disturbance caused in the businesses across countries.  

“FPI outflows from India are due to global risk-off after the outbreak of coronavirus. With a sharp decline in oil prices, India’s trade and current account deficits are expected to reduce. The government has raised excise duty on petrol and diesel which is positive for fisc,” Sameer Narang, Chief Economist, Bank of Baroda, told Financial Express Online. The macroeconomic outlook is positive, he added.

The global uncertainty is spread across the sectors and businesses worldwide are affected due to travel restrictions. RBI Governor Shaktikanta Das today said that India is not immune from the global pandemic and the uncertainty can not be estimated precisely. He also said that he is not cutting the repo rate now but he won’t deny any possibility in future as that will be circumstantial.

“Its a sheer case of sharp risk-off flows, as foreign investors exit amidst the considerable global uncertainty posed by the coronavirus spread. How this plays out would depend on the duration and intensity of both the virus’ spread and the ongoing response measures by governments, as demand and supply are impacted,” Sreejith Balasubramanian, Economist, IDFC-AMC, told Financial Express Online. The monetary policy response has been swift with the intend to ease financial conditions and impart confidence, with the role of fiscal policies being increasingly highlighted, he added.

Get live Share Market updates and latest India News and business news on Financial Express. Download Financial Express App for latest business news.

First published on: 16-03-2020 at 17:46 IST