FPIs continue to pull out investments from the Indian equities

Foreign portfolio investors (FPI) continue to pull out investments from the Indian equities amid the severe COVID-19 crisis and the lockdowns across states.

So far in May, FPIs have pulled out a net investment of Rs6,427 crore from the equities segment, showed NSDL data.

The subdued investor sentiments come on the back of the deepened Covid crisis in the country. The lockdowns and restrictions across states also have weakened the prospects of economic recovery, analysts said.

The selling in May continues after FPIs withdrew net investments of Rs9,659 crore in April. The bearish trend last month came after incessant buying in the preceding six months.

The overall net investments in 2020 now stand at Rs39,656 crore.

Foreign Portfolio Investors (FPI) ended their buying spree in April as they pulled out net investments worth Rs9,659 crore from Indian equities during the month.  The reversal in trend came at a time when the surging Covid cases and the resultant lockdowns spooked investor sentiments. The Foreign Portfolio Investors turned net sellers in March after a gap of five months.

In September, FPIs pulled out net investments worth Rs7,783 crore. Along with the second wave of Covid-19, weakness in the Indian rupee also led to the outflow of foreign funds last month, analysts said.  The net Foreign Portfolio Investors investment in 2020 now stands at Rs46,083 crore, including the net investments of Rs19,473 crore, Rs25,787 crore and Rs10,482 crore in January, February and March, respectively. Regulated by SEBI, the FPI regime is a route for foreign investment in India.

The FPI regime came as a harmonised route of foreign investment in India, merging the two existing modes of investment, that is, Foreign Institutional Investor (FII) and Qualified Foreign Investor (QFI). Three countries – the US, Mauritius and Luxembourg — accounted for more than 50 per cent of the total foreign portfolio investment (FPI) that India received so far. Out of Rs44.62 lakh crore investment, US investors accounted for Rs15.38 lakh crore, Mauritius Rs5.29 lakh crore and Luxembourg Rs3.74 lakh crore, according to data from National Securities Depository Ltd (NSDL).