FPI’s withdraw Rs.6k cr from Indian debt markets in Oct

The Dollar Business Bureau

Foreign investors have withdrawn around Rs.6,000 crore from the country’s debt markets in the first two weeks of October, after investing a huge amount in the month of September.

On the other hand, foreign portfolio investors (FPIs) have invested Rs.180 crore in the Indian stock markets during the given period.

Siddhant Jain, Chief Operating Officer (COO), SAS Online said that the recent cut in the repo rate by Reserve Bank of India (RBI) is one of the factors that resulted in the outflow. Due to downward pressure on the yields of bond, debt did not look attractive.

In addition, new RBI Governor Urijit Patel's dovish stand and flexibility to further reduce rates if required has supported the outflow, he added.

The Reserve Bank, on October 4 in its Monetary Policy Committee meeting, had reduced the policy rate by 25 basis points to 6.25 percent - a 6-year low.

As per the depositors' data, the net amount withdrawn from the debt markets by the FPIs during the period October 3-14, 2016 stood at Rs.5,946 crore.

In the previous month in September, there was a net inflow of Rs.9,789 crore.

The low inflow in the equities could be the result of the Chinese data’s below-forecast reading that has fanned new concerns about the country’s economy and Federal Reserve's last month meeting minutes that augmented the case for high interest rates this year.

Till now this year, FPIs have withdrawn a net amount of Rs.3,504 crore from debt markets, whereas they have invested Rs.51,473 crore in equities, which results in a net inflow of Rs.47,968 crore.