FPIs press exit button, take out Rs 2,500 cr in June

However, FPIs invested Rs 2,300 cr in debt markets

Foreign investors pulled out a little over Rs 2,500 crore from Indian stock markets this month, mainly on account of better returns from Asian peers and uncertainty over Greek debt crisis.

However, in debt markets, foreign portfolio investors (FPIs) invested Rs 2,300 crore in the country during the same period.

FPIs made gross purchase of shares to the tune of Rs 1,03,532 crore during June 1-26 while they sold stocks worth Rs 1,06,088 crore, taking the total net outflow to Rs 2,556 crore, latest data from depositories showed.

"FPIs have been withdrawing money from the domestic capital markets as they are finding China more attractive than India. The neighbouring country has given a return of 50 per cent. Besides, FPIs are worried over a slow revival in corporate earnings," Geojit BNP Paribas Investment Strategist V K Vijaykumar said.

Furthermore, sentiment was also hit after Greece failed to reach an agreement with its creditors ahead of a debt deadline.



Anand Shah, Chief Investment Officer, BNP Paribas Mutual Fund, said: "There is nothing to worry about FPIs' flight from the Indian stock markets. In medium to long term, India is an attractive place for investment. FPIs will start investing in our markets when issues of Greece and rate hike by US Federal Reserve get sorted out."

Data showing acceleration in industrial production growth and easing of food price inflation and expectations that above-average monsoon rain will work in favour for further monetary policy easing from Reserve Bank are expected to help FPIs to infuse money, experts pointed out.

During January to April, investments in stocks and debt by FPIs totalled Rs 94,241 crore, but a month-on-month analysis shows the fund flows are witnessing a declining trend.

FPI investments in January this year stood at Rs 33,688 crore, before dropping to Rs 24,564 crore in February, Rs 20,723 crore in March and Rs 15,266 crore in April and finally, an outflow of Rs 14,272 crore in May.

Since January, overseas investors have net invested Rs 79,768 crore in capital markets (debt and equities).