Foreign portfolio investors have withdrawn more than Rs 7,300 crore from the equity markets in the month of August so far. FPI had escaped to safe haven assets amid geopolitical tensions and few domestic concerns. Nevertheless, FPIs have empowered amount of Rs 9,364 crore in debt markets in this period.
The latest depository data show that FPIs had withdrawn net sum of Rs 7,344 crore, which is equal to USD 1.14 billion from stock markets during the period of 1st August to 18th August.
From February-July 2017, in last six months, this comes following a net inflow of over Rs 62,000 crore. Previously, they withdrew close to Rs 1,200 crore.
The total investment in equity markets of FPI is at Rs 53,610 crore, when the latest outflow was considered this year.
The senior market analysts have recognized the latest outflow from equities to geopolitical tension between the US and North Korea.
Some analysts also state that the growing geopolitical concerns have raised the element of uncertainty that has encouraged FPIs to hedge risks. For such uncertainties, emerging markets are more responsible as they restrained their investments into Indian markets.
In addition to this factor, the confidence has gone down given Securities and Exchange Board of India’s action over shell companies,s whereas a hold back in business growth will show the way to downgrade in earnings forecast for the next 1-2 quarters.
In July 2017, markets regulator SEBI has increased the FPI limit in central government securities that had offered longer rope for them to pump in money.