FPIs take out ₹22,000 crore from equities in May amid poll jitters, Chinese markets’ outperformance

Foreign Portfolio Investors withdraw ₹22,000 crore from Indian equities amid election uncertainty and Chinese market outperformance.

Foreign investors have pulled out a massive ₹22,000 crore from Indian equities so far this month, due to uncertainty surrounding the outcome of the Lok Sabha elections and outperformance of Chinese markets.

This came following a net outflow of over ₹8,700 crore in the entire April on concerns over a tweak in India's tax treaty with Mauritius and a sustained rise in U.S. bond yields. Before that, FPIs made a net investment of ₹35,098 crore in March and ₹1,539 crore in February.

Going forward, as clarity emerges on the election front, Foreign Portfolio Investors (FPIs) are likely to buy in India, since they cannot afford to miss the post-election results rally.

Actually, the rally may begin even before the election results, V.K. Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said.

According to data with depositories, Foreign Portfolio Investors (FPIs) witnessed a net outflow of ₹22,047 crore from equities this month (till May 24).

"This heavy selling was triggered by the massive outperformance of Chinese stocks. The Hang Seng index, dominated by Chinese stocks (FPIs invest through the Hong Kong market since there are restrictions on investing through the Shanghai market) surged 7.66% during the last month," Mr. Vijayakumar, said.

The election-related jitters, too, might have influenced FPI selling.