FPIs pull out Rs 25,586 cr from equities in May on election concerns, China’s appeal

Foreign investors withdrew a whopping Rs 25,586 crore from Indian equities in May, influenced by uncertainties surrounding the general election and the strong performance of Chinese markets. This outflow was significantly higher than the previous month’s Rs 8,700 crore. FPIs had made net investments in March and February but had taken out Rs 25,743 crore in January.

The outcome of the election on June 4 and US interest rates will play a crucial role in determining FPI flows in the future. Factors such as high valuations, weak earnings, political uncertainties, and the attraction of Chinese markets contributed to the selling trend. Despite this, positive economic indicators like robust GDP growth and stable inflation could reverse the trend.

Market experts predict that the long-term outlook for FPI flows remains positive, especially in the debt market. Despite recent outflows, the overall sentiment remains optimistic, with the potential for increased inflows if current economic indicators continue on a positive trajectory.