Foreign portfolio investors’(FPIs) outflows from equity cash segment crossed $1 billion in the 12 trading sessions so far this month as foreign funds continued to flee riskier assets such as stocks and crude oil on growing concerns over world’s economic growth.
According to provisional data from stock exchanges, foreign funds were net sellers to the tune of $180 million on Monday, taking the month-to-date tally to $1.019 billion. Overseas institutions have sold Indian shares in 10 out of 12 sessions this month, Bloomberg data showed.
Experts said global economic growth concerns and uncertainty over China’s currency have prompted foreign investors to trim their equity portfolios globally, not just in India. Moreover, poor corporate earnings and lack of progress on economic reforms in India have accelerated selling by FPIs.
“Growth has decelerated virtually everywhere alongside the decline in oil prices…First, falling prices for raw materials, including oil, partly reflect cooling demand. The shale oil revolution and OPEC pumping in have increased supply, but weaker demand is also playing a role,” said Frederic Neumann, co-head of Asian Economics Research, HSBC, in Hong Kong.
Neumann said if underlying growth is even weaker than currently Asia and the world economy might see activity sag further once the cushion from the fall in oil prices fades. “Looks like we’ll be stuck in a slow grind for a while,” Neumann added.