FPIs pull out Rs 14K-cr in May, 1st net outflows in 2 years

Overseas investors have pulled out more than Rs 14,000 crore from the Indian capital markets in May, making it the first month of net outflows in nearly two years.

The debt market has seen steeper outflows than equities.

The net outflow by Foreign Portfolio Investors (FPIs) from equities stood at Rs 5,768 crore in May, while the same for the debt markets was at Rs 8,504 crore taking the total to Rs 14,272 crore ($2.23 billion), according to the latest data from depositories.

This was the first instance of monthly net outflow from the capital markets (debt and equity) since August 2013, when FPIs withdrew Rs 15,695 crore.

The huge sell off comes amid worries over imposition of 20% minimum alternate tax on capital gains by overseas investors till April 1, 2015.

Experts also attributed outflows to global sell off in bonds, rise in global crude oil prices and uncertainty on rate cut by the Reserve Bank.

However, some analysts are bullish on FPI inflows in the Indian capital markets in the long-term.

Month-on-month analysis showed the fund inflows are on a decline as 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 net outlfows in May.

Since January 2015, overseas investors have invested a net amount of around Rs 80,000 crore in the capital markets.