Coronavirus impact: FPIs pull out Rs 9,103 cr in April so far

Overseas investors pulled out a net Rs 9,103 crore from the Indian markets in April so far as the Covid-19 crisis triggered a return to safe haven assets like gold and dollar-denominated securities.

As per latest depositories data, foreign portfolio investors (FPI) withdrew a net sum of Rs 2,951 crore from equities and Rs 6,152 crore from the debt segment between April 1-9. The total net outflow stood at Rs 9,103 crore.

In the previous month, FPIs had withdrawn a record amount of over Rs 1.1 lakh crore on a net basis from the Indian markets (both equity and debt).

The capital outflow in March was the highest withdrawal ever since FPI data has been made available on National Securities Depository Ltd.

"As Covid-19 pandemic worsens across geographies, the disruption to the global economy is inevitable. The pandemic has adversely impacted investor sentiment and infected the markets globally.

"Emerging markets have been worst hit with foreign investors marching out from there to take shelter in safer investment avenues. India has been among the worst hit in the emerging market basket. Enhanced volatility can be seen in both the markets with equity markets falling sharply and yields in the fixed income segment moving up significantly," said Himanshu Srivastava, senior analyst manager research, Morningstar India.

Harsh Jain, co-founder and COO at Groww noted that FPI investments in the equity category have been positive in the last two trading sessions of April and this can be explained by the sentiment in European markets changing on hopes that the virus is nearing its peak.

He further said an inflow of around USD 7 billion is likely as the weight of Indian stocks has increased in the MSCI index.

According to Srivastava, though the broader trend continues to be negative, this week the quantum of net outflow was much lower compared to the previous few weeks.

During this holiday-truncated week (between April 6-10), with just three trading sessions, "FPIs withdrew net assets worth USD 457.5 million from the Indian markets. This was significantly lower than the net outflow of USD 1.7 billion recorded in the previous week."