FPIs pull out Rs 7,500 crore from capital markets

"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.

Foreign investors have pulled out nearly Rs 7,500 crore from the Indian market this month so far, after pumping in a staggering amount in September. Photo: Pixabay

Foreign investors have pulled out nearly Rs 7,500 crore from the Indian market this month so far, after pumping in a staggering amount 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Most of the funds have been withdrawn from debt markets during the period under review.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, 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 per cent to 6.25 per cent, a 6-year low.

According to depositors' data, net withdrawal by FPIs stood at Rs 6,929 crore from the debt markets during October 3-21, while it pulled out a net sum of Rs 566 crore from the equities during the period under review, translating into total outflow of Rs 7,495 crore.

The outflow comes following a net inflow of Rs 20,232 crore in the preceding month (September).

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 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 4,487 crore from the debt markets, while they have pumped in Rs 50,727 crore in equities, resulting in a net inflow of Rs 46,240 crore.

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Foreign Portfolio Investors (FPIs)Reserve Bank of India (RBI)debt markets Markets Investment Equity market US Fed Rate Cut Urijit Patel