Mumbai: Foreign portfolio investors (FPIs), who are previously known as FIIs, have turned net sellers of Indian equities for the second consecutive month, their longest selling spree since August 2013 as worries regarding Minimum Alternative Tax (MAT), sudden rise in global crude oil prices and lower than expected earning numbers from India Inc. forced some of them to look at other emerging markets like China and Taiwan.
In May 2015, FPIs have offloaded domestic equities worth Rs 5,768.48 crore. During the previous month, if the FPI investment that came on account of the Daiichi Sankyo’s 8.9 per cent stake in Sun Pharmac-euticals is excluded, they were net sellers to the tune of Rs 4,636 crore. “Indian markets have under-performed some of their emerging market peers. Some of the passive funds are reshuffling their portfolios and reallocating more funds to some of the best performing markets like China and Taiwan.
The corporate earnings growth has remained one of the major factors for this under-performance and foreign fund inflow would pick up momentum only when the earnings growth pick-up steam,” said Rikesh Parikh, vice-president, equities at Motilal Oswal Financial Services.
However, others said that foreign portfolio investment would return to India in coming days, as an unexpected contraction in the US GDP growth for the January-March quarter has allayed fears about an immediate interest rate hike by the US Federal Reserve. The US GDP growth contracted 0.7 per cent during the fourth quarter of FY15 as compared to an earlier estimate of 0.2 per cent growth.
