Continuing their selling spree, foreign investors withdrew a net sum of Rs 1,263 crore from the Indian capital markets in the first week of September amid global headwinds even as the government rolled back enhanced surcharge on foreign portfolio investors.
As per latest data from depositories, foreign investors pulled out a net Rs 4,263.79 crore from equities but infused a net Rs 3,000.86 crore in the debt segment during Sept. 3-6, translating into a net outflow of Rs 1,262.93 crore. Markets were closed on Sept. 2 for Ganesh Chaturthi.
The foreign investors remained net sellers for the previous two months, pulling out Rs 5,920.02 crore in August and Rs 2,985.88 crore in July from the domestic capital markets (equity and debt).
“The U.S.-China trade war continues to influence the global investor sentiments. Last Friday's announcement of GDP might also have caused some investors to withdraw from the equity markets,” said Harsh Jain, chief operating officer at Groww.
Overseas investors pulled out more than Rs 30,000 crore from equities during July-August after Finance Minister Nirmala Sitharaman in her maiden Budget enhanced tax surcharge on foreign investors.
“FPIs have been aggressively selling for the last two months as the enhanced surcharge announced during the Union budget and economic slowdown weighed on the sentiments,” said Ajit Mishra, vice president of research at Religare Broking Ltd.
“Further, falling global yields has also led to outflow,” Mishra said. “Despite rollback of FPI surcharge by the government, the selling pressure continued, making it evident that the outflow was due to lack of valuation comfort in the Indian markets and citing signs of the economic slowdown.”
FPI fund flows would remain sluggish until there are meaningful signs of revival in the economy, he said.
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