Foreign investors have pulled out close to Rs 6,200 crore from the country’s stock markets so far this month, taking the total outflow to more than Rs 11,500 crore in 2016.
The outflow trend is expected to continue in the coming days following Britain’s exit from the European Union.
“While there could be some outflows from FPIs in Indian bonds amid global risk-off environment, bond yields are likely to soften,” SBI Mutual Fund Chief Investment Officer Navneet Munot said.
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The data sourced from the depositories showed Foreign Portfolio Investors (FPIs) have sold debt securities worth Rs 6,189 crore ($918 million) till June 24, following an outflow of Rs 4,409 crore in the preceding month.
However, FPIs pumped Rs 4,429 crore in the equity markets so far in June.
“Our equity markets will continue to gyrate to the tune of global sentiments in near-term,” he said.
“Historically, these kind of global events have impacted Indian market disproportionately given the excessive dependence on FPI flows. With steady flows from domestic investors and improved macro fundamentals, our ability to weather these storms is relatively better,” he added.
This year, FPIs have invested Rs 19,883 crore in equities while withdrawing Rs 11,537 crore from the debt market, resulting in a net inflow of Rs 8,345 crore.
Capital poured in by FPIs is often referred to as ‘hot money’ because of its unpredictability, although they continue to remain the most important drivers of Indian stock markets.