New Delhi: Staying out of risk amid the coronavirus epidemic, foreign investors have so far taken a net withdrawal of Rs 10,347 crore from the Indian capital market in April.
Between April 1-24, foreign portfolio investors (FPIs) pulled out a net amount of Rs 6,822 crore from equities and Rs 3,525 crore from debt segment, according to data from the depository.
Total net outflow stood at Rs 10,347 crore. However, the outflow volume has come down since March, when FPI withdrew a record Rs 1.1 lakh crore from the Indian markets (both equity and debt) on a net basis.
Himanshu Srivastava, Senior Analyst Manager, Morningstar India, said, “The sharp decline in net flow can be credited to India for doing well among foreign investors regarding aggressively curbing the COVID-19 epidemic.”
In addition, measures announced by the government and RBI from time to time to revive the sagging economy will also resonate well with investors.
However, he cautioned that sentiments are negatively tilted and FPIs will largely adopt a wait-by-point approach and focus more on short-term strategic bets.
Emerging markets are considered a risky investment destination and are more prone to crises of this magnitude. With a low risk appetite, foreign investors move to safer investment avenues and safer locations such as USD and gold.
According to Srivastava, although the slowdown in net outflow volume is a positive indicator, it would be early to consider this as a precursor to a change in trend.
As far as the COVID-19 epidemic is concerned, this scenario remains critical. The world has been struggling for a long time against a global economic downturn and coronovirus. He said that the degree of loss in the global economy, businesses and markets is yet to be ascertained accurately.
Keeping in mind the domestic situation, Saurav Chakraborty, CEO and Director of Capital Quotient, said, “Everyone needs to keep a close eye on the movements of daily FPIs and DIIs (domestic institutional investors). With issues related to Franklin Templeton, Confidence. Listed avenues in large institutions and for parking funds have been shaken, and will also contribute to higher volatility going forward. Area before we get far too much pain to see meadows with greenery.