Published On : Thu, Mar 31st, 2016

Foreign investors take out Rs 18,000 crore from Indian markets in FY16

New Delhi/Nagpur: In the first outflow of overseas funds from Indian capital markets in seven years, foreign portfolio investors (FPIs) took out an estimated amount of Rs 18,000 crore during fiscal 2015-16.

This is also only the third time since foreign portfolio investors began investing in Indian markets in 1992 that they have turned net sellers for an entire financial year.

As per the market data, the net outflow during the fiscal ended today would have been more than double, but buying spree resumed in the last month. FPIs are estimated to have infused a net amount of nearly Rs 20,000 crore (about USD 3 billion) during March.

During March, FPIs were net buyers to the tune of over Rs 21,000 crore in equities, but took out a net amount of Rs 1,500 crore from debt markets.

FPIs had embarked on a selling spree towards end of calendar year 2015 amid weakening trends in Indian equity markets, but returned to hectic buying this month on expectations of further rate cuts by Reserve Bank and signs of strengthening macroeconomic fundamentals of the country.

For the entire fiscal, FPIs were net sellers to the tune of an estimated Rs 14,000 crore in equities and of about Rs 4,000 crore for the debt securities.

Compared to a net outflow of Rs 18,000 crore in 2015-16, FPIs had made huge net inflows of a record high amount of over Rs 2.77 lakh crore in the previous fiscal.

Last time, Indian markets saw net outflow of funds by FPIs was in 2008-09 at over Rs 45,000 crore, while they had taken out a net amount of about Rs 1,600 crore in 1998-99.

The cumulative net investment by these foreign investors have now fallen to Rs 11.07 lakh crore, down from over Rs 11.22 lakh crore at the start of the fiscal 2015-16.

FPIs, which were earlier known as FIIs or Foreign Institutional Investors, were allowed to invest in the Indian markets over two decades ago in November 1992.

Their cumulative net investments in the equity markets now stands at over Rs 8 lakh crore while that in the debt securities is over Rs 3 lakh crore.

These investors have emerged as a key driver of Indian markets over the past many years and hold a significant chunk of non-promoter shares of listed companies. In the recent years, they have also been investing heavily in government bonds.