Foreign portfolio investors (FPI) have withdrawn over Rs 1 lakh crore from the Indian capital markets in March so far amid heightened fears of a coronavirus-induced global recession. Experts believe foreign investors are withdrawing from riskier assets and are opting for safe havens such as dollar-denominated asset classes and gold.
According to the depositories data, overseas investors withdrew a net sum of Rs 56,247.53 crore from equities and Rs 52,449.48 crore from the debt segment, taking the net outflow to Rs 1,08,697.01 crore between March 2 and March 20. The latest withdrawal by FPIs came after six months of net buying in the domestic capital markets since September 2019.
“The sudden emergence of the coronavirus pandemic this year has bought the global markets to its knees. This has resulted in the exodus of foreign investors from emerging markets like India into safer destinations,” said Himanshu Srivastava, senior analyst at Morningstar Investment Adviser India.
Amid the coronavirus outbreak, resources are increasingly being centered around controlling the spread of the virus, which is resulting in slowing down of other economic activities, experts believe.
“Foreign investors have preferred to take a flight to safer investment options, such as dollar-denominated asset classes and gold against investing in fixed income securities of emerging markets such as India,” Srivastava added.
