Covid Fear: Foreign portfolio investors withdraw Rs 5,936 crore from equities in May

Foreign investors had pulled out Rs 9,659 crore in April after infusing money in the preceding six months, according to the depositories’ data. 

If fears of COVID-19 persist among overseas investors, then further redemptions cannot be ruled out, Himanshu Srivastava, Associate Director - Manager Research, Morningstar India, stated. 

According to the data, foreign portfolio investors (FPIs) withdrew a net sum of Rs 5,936 crore from Indian equity markets during May 3-7. 

Prior to April’s outflow, FPIs had been infusing money in equities since October. They invested over Rs 1.97 lakh crore in equities during October 2020 to March 2021. This included a net investment of Rs 55,741 crore in the first three months of this year. 

“The nervousness among FPIs with regards to the second wave of coronavirus pandemic in India was visible in the flow numbers for this week,” Srivastava said. 

Alok Aggarwala, Chief Research Officer, Bajaj Capital, said the pullback by FPIs is consistent with a sharp rise in COVID-19 cases in India, state-wide lockdowns and the consequent slowdown in growth. 

In addition, a weak currency added to the outflows by FPIs, he added. 

So far this year, overseas investors have put in a net sum of Rs 40,146 crore in equities, however, they pulled out net amount of Rs 15,547 crore from debt securities.