Foreign investors pull out Rs 10,000 crore from capital markets in October

FPIs stood at Rs 6,000 crore from the debt markets in October, while it pulled out a net sum of Rs 4,306 crore from the equities during the period under review, translating into total outflow of Rs 10,306 crore. Image Source: Reuters

Foreign investors have pulled out more than Rs 10,000 crore from the Indian capital market this month, after pumping in Rs 20,232 crore in September.

Most of the funds have been withdrawn from debt markets during the period under review.

"The recent rate cut by RBI is one of the factors for the outflow from debt markets. With downward pressure on bond yields, debt does not seem attractive," SAS Online Chief Operating Officer (COO) Siddhant Jain said.

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"Besides, the new RBI governor's dovish stance and flexibility to cut rates further, if needed, has helped in the debt outflow," he added.

On October 4, the Reserve Bank slashed policy rate by 0.25% to a 6-year low of 6.25%.

According to depositors' data, net withdrawal by FPIs stood at Rs 6,000 crore from the debt markets in October, while it pulled out a net sum of Rs 4,306 crore from the equities during the period under review, translating into total outflow of Rs 10,306 crore.

In September, the market witnessed a net inflow of Rs 20,232 crore.

The outflow in equities could be attributed to a below-forecast reading on Chinese data that fanned fresh concerns about its economy. What clouded sentiment further was the US Fed chief Janet Yellen's commentary on the US economy, indicating the need for aggressive steps to reboot it.

So far this year, FPIs have pulled out a net sum of Rs 3,558 crore from the debt markets, while they have pumped in Rs 46,987 crore in equities, resulting in a net inflow of Rs 43,428 crore.

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