FPIs take out $1 billion from capital markets in November

New Delhi: Overseas investors have pulled out more than USD 1 billion from the Indian capital markets since the beginning of the month due to lacklustre quarterly earnings and concerns over a possible rate hike by the US Federal Reserve.

The sell-off came after Foreign Portfolio Investor (FPI) inflow in the capital markets (equity and debt) had hit a seven-month high in October.

As per the data compiled by the depositories, net outflow in equities stood at Rs 5,713 crore between November 2-19, while it was Rs 2,565 crore from debt, translating into a total of Rs 8,278 crore (USD 1.26 billion).

Earlier, FPIs had made a net investment of Rs 22,350 crore last month, making it the highest investment by investors since March, when they had poured in Rs 20,723 crore into the Indian market.

The huge inflows during October also reversed the outflows seen during the last two months. FPIs pulled out over Rs 23,000 crore from the capital markets in the last two months (August-September) on fears of an economic slowdown in China, which triggered a global sell-off.

The minutes of latest US Fed meeting showed that it's ready for a December lift-off provided subsequent actions are strongly tied to consistent improvements in the economy, which prompted investors to withdraw money.

Investor mood remained fragile because of disappointing quarterly earnings by blue-chips.

"Lingering concerns about earnings and the worsening global risk environment have prompted FPIs to pull-out from the Indian markets," said Vijay Singhania, Founder-Director, TradeSmart Online, a leading discount brokerage firm.

Further, macroeconomic data also impacted investor sentiment. Industrial production slackened to a four-month low of 3.6 percent in September, while retail inflation inched up to 5 percent in October, as per the latest data.

Since the beginning of the year, overseas investors have made a net investment of Rs 21,984 crore in equities and Rs 52,531 crore in debt market.