FPIs take out Rs 4,600 cr from capital markets in September

Outflows unlikely to continue as US Fed maintained interest rate, may give RBI headroom to lower its key lending rate

Foreign investors have pulled out over Rs 4,600 crore from the capital markets since the beginning of this month primarily on account of various global and domestic factors.

Outflows are unlikely to continue as the US Federal Reserve maintained status quo on interest rate, which may give the Reserve Bank of India (RBI) some headroom to lower its key lending rate, according to some analysts.

The latest pull-out follows a record net outflow of Rs 17,428 crore from equities last month. That was the highest net outflow by foreign portfolio investors (FPIs) in a single month since 1997.

The segregated data prior to 1997 was not available.

FPIs have withdrawn a net of Rs 3,560 crore from equities, while they pulled out Rs 1,050 crore from the debt markets during September 1-18, taking the total to Rs 4,610 crore ($695 million), according to depositories data for this month.

Market experts attributed the huge outflows to sustained global risk-off trend along with concerns over economic slowdown in China and currency devaluation by the world's most populated country.

Besides, China's weak PMI and lower GDP growth dampened sentiments in India.

Since the beginning of the year, FPIs have made a net investment of Rs 23,961 crore in equities and Rs 37,654 crore in debt markets.