FPIs pull out over Rs 1 trillion in March over coronavirus scare

While the coronavirus pandemic raised fears of a global recession, foreign investors began to row Indian capital markets by withdrawing a huge crore of more than 1 lakh rupees in March after remaining net buyers for six consecutive months.

In order to contain the spread of the coronavirus, locks have become a worldwide standard and have led REITs to take a cautious stance, said market experts.

Custodian data showed that a net amount of 59,377 crore rupees was withdrawn from the stocks and that 52,811 crore rupees were withdrawn from the debt segment by foreign portfolio investors (REITs) between 2 and March 27.

Total net outflow amounted to Rs 1,12,188 crore in March, which comes after six consecutive months of investment by REITs since September 2019.

It is also the highest withdrawal ever recorded since the release of REIT data on National Securities Depository Ltd.

“With the total foreclosure announced by the government, businesses and commerce have stopped, which could further slow the rate of national economic growth,” said Himanshu Srivastava, senior analyst – research director at Morningstar India.

On March 24, Prime Minister Narendra Modi announced a 21-day national lockdown as part of efforts to stem the epidemic of coronavirus infections.

READ ALSO: LIVE Coronavirus: PM to talk about Mann Ki Baat, explain the 21-day lockout

“As the world intensifies its fight against the coronavirus, the signs of its complicity must still be observed. Although several measures have been announced to fight against the disease and that resources have been put in place, concerns about the Global economy witnessing prolonged slowdown This is what keeps foreign investors away from emerging markets like India, who are seen as more sensitive to these events, “added Srivastava.

In the current scenario, REITs have preferred to move towards safer investment options, such as dollar-denominated asset classes and gold, rather than investing in fixed income securities of emerging markets like l ‘India,’ he said.

Regarding the future of REIT flows, he said the situation should stabilize as visible signs of coronavirus are brought under control. Until then, however, this will continue to be one of the main areas of intervention for IPFs, as this could have a more serious impact on the already slowing global economy.

According to Harsh Jain, co-founder and COO, Groww, “the measures announced by the Minister of Finance and RBI are encouraging but we will have to wait and see what impact this will have. We must keep an eye on future announcements and their effects on the economy. ‘economy.


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