FPIs pull out over Rs 11000 crore in July, highest in nine months

New Delhi, Jul 31: Overseas investors have pulled out over Rs 11,000 crore (nearly $2 billion) from Indian equities in July, the steepest outflow in nine months, on account of multiple headwinds, including the tax on ‘super-rich’ announced in Budget 2019-20.
After turning net buyers for the fifth straight month till June, foreign portfolio investors (FPIs) withdrew a net of Rs 11,743 crore ($1.7 billion) in July. This was their highest outflow since October 2018, when they had pulled out Rs 28,921 crore ($3.93 billion) from the equity market. Between February and June, 2019, they pumped net amount of Rs 82,910 crore ($12.7 billion) in equities, according to the depository data.
“Higher taxation for FPIs has been a disappointing measure. There is a lack of clarity from the government on the policy front, which has somehow upset the overseas institutional investors,” says Ajay Garg, managing director at Equirus Securities.
The FPIs sell-off during the month has seen the benchmark indices S&P BSE Sensex (down 5 per cent) and Nifty 50 (down 6 per cent) register their sharpest monthly fall since September 2018, when they tanked 6.2 per and 6.4 per cent, respectively.
However, despite the announcement, the total cumulative net FPI inflow thus far in the current calendar year has remained positive. FPIs have pumped in net amount of Rs 66,905 crore in first seven months of calendar year 2019. They were net sellers of Rs 3,411 crore during the same period of 2018.
Besides the tax proposals, foreign investors, experts suggest, are also worried about the economic growth amid falling consumption, weak corporate earnings and a patchy monsoon thus far.