FPIs' bearish stance continues; net outflow at USD 4-bn in May

Foreign investors have pulled out a massive USD 4 billion (over Rs 26,700 crore) from capital markets so far this month, primarily due to surge in global crude prices.

This comes after such investors had taken out more than Rs 15,500 crore from capital markets (equity and debt) in April, which was steepest outflow in 16 months.

According to the latest depository data, foreign portfolio investors (FPIs) withdrew a net sum of Rs 7,819 crore from equities and another Rs 18,950 crore from the debt market during May 2-25, taking the total outflow to Rs 26,769 crore (USD 4 billion).

Harsh Jain, chief operating officer at Groww, an investment platform, attributed the latest outflow mainly to rise in cost of crude oil prices. This would impact all the oil importing economies, including India, and adversely affect its current account deficit, fiscal deficit, imported inflation and create headwinds for economic growth.

Besides, investors were cautious after US President Donald Trump cancelled a planned meeting with North Korean leader Kim Jong Un and threatened to impose tariffs on auto imports.

Also, FPIs had started profit booking before the Karnataka elections, which was a crucial indicator for the 2019 big elections results, he added.

"Another discomfort among the FPI (Category III) was the Sebi's requirement for additional documents from the key people in such a fund. Their concern is around the privacy and data theft," Jain noted.

So far this year, FPIs have put in just Rs 641 crore in equities and withdrew nearly Rs 30,000 crore from the debt market.