Over Rs 28,000 crore has been removed from stocks by foreign investors so far in May

A significant amount of Rs 28,200 crore has been removed from Indian stocks by foreign investors so far in May because to the uncertainty around the results of the general elections and the allure of Chinese market values.

Data from the depositories indicates that, until May 17, there was a net withdrawal of Rs 28,242 crore from foreign portfolio investors’ holdings in shares.

Notably, this withdrawal surpassed April’s net pullout of almost Rs 8,700 crore by a significant margin. Concerns over a change to India’s tax agreement with Mauritius and a persistent increase in US bond rates led to the withdrawal last month.

It is expected that the election outcomes would likely cause a significant shift in the future equities flows of foreign portfolio investors (FPIs).

Additionally, the data shows that during the review period, FPIs made investments in the debt market of Rs 178 crore.

Foreign investors contributed a total of Rs 19,836 crore in January, Rs 22,419 crore in February, and Rs 13,602 crore in March. The impending addition of Indian government bonds to the JP Morgan Index was the primary driver of this influx.

In September of last year, JP Morgan Chase & Co. said that starting in June 2024, it would include Indian government bonds into its benchmark emerging market index. It is expected that India would gain from this historic inclusion, which will bring in between USD 20 and $40 billion over the next 18 to 24 months.

FPIs have taken out a net total of Rs 26,000 crore in stocks so far in 2024. Nonetheless, they made a debt market investment of Rs 45,000 crore.

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