Foreign fund outflows near Rs 1 lakh crore in 2018

New Delhi, Dec 17: Foreign portfolio investors’ (FPIs’) fundings have long been known as ‘hot money’ that comes in fast but can go out even faster. And it is the outward journey that seems to be the underlying theme for Indian capital markets as 2018 draws to a close, with net outflows nearing the Rs 1-lakh-crore mark. This could make 2018 the worst year for FPI investments in the Indian capital markets and follows a record net inflow of about Rs 2 lakh crore into equities and debt securities in 2017, according to data available with the depositories and exchanges.
As of now, the FPIs have made a net withdrawal of about Rs 87,000 crore from Indian markets with about a fortnight of trading remaining.
Analysts warn the trend may continue in the wake of negative sentiments about possible changes in the regulatory framework after the sudden exit of the RBI governor and the emerging political scenario. Marketmen feel FPIs have stamped their influence very strongly this year after their stiff resistance to proposed changes in norms for recording beneficiary ownership of their funds forced regulators to have a re-think and eventually change the rules.
FPIs are among the largest shareholders in several listed blue-chips, especially in the banking and financial services sectors, while their overall average holding is estimated at around 25%. This is one of the biggest holdings after promoters, who typically own an average of about 60% stake in listed Indian firms. The rest is divided among various domestic institutional investors such as MFS, insurers, pension funds and corporates, as also HNIs and small retail investors.