FPIs pull out Rs 196 billion in September; quantum of MF flows slows

FPIs pull out Rs 196 billion in September; quantum of MF flows slows
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New Delhi, Sep 27: Foreign portfolio investors (FPIs) have pulled out a combined Rs 196 billion from Indian debt and equity markets so far in September on concerns of widening current account deficit on the back of rising oil prices and sliding rupee and global trade wars.
According to the latest official data from NSDL, FPIs have withdrawn a net Rs 107.46 billion from the equity market and Rs 88.78 billion from debt between September 3 to September 26, taking the total amount withdrawn to Rs 196.24 billion ($2.7 billion), data show.
FPI, according to analysts, have been more nervous as regards the debt market given the sliding rupee, fiscal and current account deficits.
“India has been an off-benchmark bet for FIIs in debt markets. Going ahead, flows into equites will also depend on the overall flows into the emerging markets. There is bound to be some nervousness as we head closer to the general elections. The recent IL&FS event also dents confidence. It is difficult to say whether there will be outflows, but some moderation is on the cards going ahead,” says Gautam Chhaochharia, head of India research, UBS Securities.
FPIs were net sellers for five out of six months of the current financial year 2018-19 (FY19) in the equity segment and have pulled out Rs 272 billion thus far in financial year 2018 – 19 (FY19).
Meanwhile, the S&P BSE Sensex falling 5.6 per cent thus far in the month is set to post its sharpest monthly decline since February 2016, while the mid-cap and small-cap indices have dipped 9.5 per cent and 11.5 per cent, respectively.
Domestic mutual funds (MFs), on other hand, have remained bullish and continued to pour into Indian equities and have been net buyers for 26 consecutive months. Since August 2016, MFs have made net investment of Rs 2.41 trillion into equities, Securities and Exchange Board of India (Sebi) data show.
However, the quantum of flow over the past few months has reduced with their net investment totalling Rs 157 billion in the July – September quarter, as compared to an average around Rs 300 billion during the past five quarters. Thus far in September, their investment in equity and debt segments touched Rs 288 billion.