Foreign fund investors withdraw $5 billion from Indian stock market

Foreign investors have lashed out at the Indian stock market for the quarter ended March. About $5 billion (about Rs 37,500 crore) has been withdrawn from India-focused foreign funds and ETFs.

Foreign investors invest in the Indian stock market through these funds and exchange-traded funds (ETFs). In the previous quarter, the December quarter, these funds sold for just $2.1 billion. According to a report by Morningstar India, the eighth consecutive quarter has been the dominating foreign funds.

Why the money is being withdrawn

During the March quarter, foreign funds have made net withdrawals of $3.6 billion, while $1.4 billion has been withdrawn through foreign ETFs. In fact, foreign investors are withdrawing their funds to avoid risks caused by coronavirus outbreaks and lockdowns.

“Even before the lockdown was announced, the condition was not very persuasive,” Morningstar said. There was a lot of slowness in economic growth and concern over the results of companies’ earnings,” he said.

Investment path for foreigners

Offshore or foreign funds are ones that are not in India but abroad and invest in the Indian stock market. These are some of the major investment instruments through which foreign investors can invest in the Indian market.

According to the report, foreign institutional investors also withdrew $6.4 billion from the Indian stock market and $9.5 billion from the Indian debt market in the March quarter. In April, FIIs have netted out $90.4 million. However, they remain buyers so far in May.