Exit of foreign funds: withdrawal of 6.4 billion investment

Mumbai, May 19, 2020, Tuesday

With the economic crisis caused by the Corona epidemic, the uncertainty of the Covid-12 persisted, with foreign portfolio investors (FPIs) and foreign funds selling out in the Indian stock market. Increasing risk due to Corona, these foreign investors have been withdrawing ભારતીય 2.7 billion from the Indian stock market in the March 2020 quarter and selling steadily.

The foreign investor-FPIs made a net purchase of 2.7 billion in assets in the last quarter of December 2017. FPIs had a net purchase of ૧ 1.31 billion in January and a net purchase of ૫ 25 million in February 2020. However, in March, FPIs were the biggest sellers, selling net assets of 2.3 billion. According to a report, these foreign investors have begun to withdraw their investment from developing markets such as India, a relatively more risky place, in the face of uncertainty as to how much and for how long the global Coro epidemic will affect the global economy and financial markets.

The quarter was started by FPIs with caution due to geopolitical tensions between the US and Iran and a rapid change in the trend in trade conditions between the US-China. But as these investors began to ease their worries, they slowly began to digest the risks. These investors went out to buy in the Indian stock markets after a trade deal was signed between the US and China. Investment was also boosted by positive sentiment around the budget and the Reserve Bank of India's decision to maintain a flexible approach in its lending policy to attract foreign investment. But with the onset of the Kovid-12 epidemic, foreign investors began to take offloading in global markets, taking risks.

On a consolidated basis in the March 2020 quarter, FPIs' net sales in the Indian stock market stood at a whopping ૪ 2.8 billion. That was higher than the previous quarter's net purchases of 2.3 billion. The value of FPIs invested in Indian stocks was માં 21 billion in the quarter ended March 2020, down from ૪૩૨ 4 billion in the December quarter of 2017. Which is the lowest recorded in the last six years. Earlier, it was valued at 4 billion at the end of March 2017.

Even after that, foreign investors continued to exit India in April. However, net sales in that month were much lower than in March. These foreign investors had a net sale of assets worth Rs 30.5 crore in the month. Of course, FPIs then became the strongest net buyer in May 2020 and made a net purchase of ૮ 4.5 billion in the Indian stock market by May 19, 2020. But in the last two days, FPIs have seen a massive net sale of Rs 2,000 crore worth of shares on May 17, 18 and May 20, 2020.