Foreign investors pull out Rs 14,800 crore from Indian stocks in June’s first week.
Foreign investors withdrew nearly Rs 14,800 crore from the Indian stock markets during the first week of June amid uncertainty over the general election results and better valuations in Chinese equities. According to depositories data, foreign portfolio investors (FPIs) have been selling after pulling out Rs 25,586 crore in May and over Rs 8,700 crore in April due to poll jitters and a rise in US bond yields.
Experts note the actual election outcome, which did not give a clear majority to any party, came as a divergence from exit polls, leading to a reversal of market sentiment.
Besides, FPIs perceive Indian markets as overvalued and are shifting focus to cheaper Chinese stocks whose attractiveness has improved.
On the other hand, FPI investment in Indian debt jumped over Rs 4,000 crore in June as bonds were included in the JP Morgan Index, driving inflows since January.
While the long-term outlook for FPIs in Indian debt is positive given global index inclusions, near-term volatility due to global macro uncertainty remains a concern.
From January, foreign investors have pulled Rs 38,158 crore from equities but invested Rs 57,677 crore in bonds. Market movements and political stability will determine their future investment decisions.
