FPIs outflow from capital markets touches Rs 4,700-crore in June

NEW DELHI: Foreign investors have pulled out over Rs 4,700 crore from the Indian capital markets in first two weeks of the month, primarily on account of attractiveness of its Asian peers, worries over a slow revival in corporate earnings and continued worries over taxation issues.

The debt market has seen steeper outflows than equities. The net outflow by Foreign Portfolio Investors (FPIs) from equities stood at Rs 1,310 crore during June 1-12, while the same for the debt markets was at Rs 3,431 crore taking the total to Rs 4,741 crore, shows latest data from depositories.

"FPIs have been withdrawing money from the domestic capital markets as they are finding China more attractive than India. Besides, FPIs are worried over a slow revival in corporate earnings.

"In addition, FPIs are apprehensive that the government would impose a 20 per cent Minimum Alternate Tax (MAT) on profits earned by them," UTI Mutual Fund EVP and Fund Manager V Srivastava said.

Srivastava noted that though "in the short-term, there is no trigger for FPIs to pump in money in the domestic capital markets but in medium to long term, India is an attractive place for investment".

During January to April, investments by FPIs totalled Rs 94,241 crore, but month-on-month analysis shows the fund flows are witnessing a declining trend.

FPI investments in January this year stood at Rs 33,688 crore, before dropping to Rs 24,564 crore in February, Rs 20,723 crore in March and Rs 15,266 crore in April and finally an outflow of Rs 14,272 crore in May.

Since January 2015, overseas investors have invested a net amount of 75,295 crore in the capital markets (equities and debt).