Foreign investors pulled out a massive Rs 29,714 crore from the capital markets in May, making it the biggest outflow in 18 months, primarily due to a surge in global crude oil prices. This comes following an outflow of Rs 15,561 crore from the capital markets (equity and debt) in April. Prior to that, foreign investors had pumped in Rs 2,662 crore in March.

According to the latest depository data, foreign portfolio investors (FPIs) withdrew a net sum of Rs 10,060 crore from equities and another Rs 19,654 crore from the debt market in May, taking the total to Rs 29,714 crore ($4.4 billion). This is the steepest outflow from the capital market since November 2016, when FPIs had pulled out Rs 39,396 crore.

Harsh Jain, Chief Operating Officer at Groww, an investment platform, attributed the outflow mainly to a rise in cost of crude oil prices. This would impact all the oil importing economies, including India, and adversely affect its current account deficit, fiscal deficit, imported inflation and create headwinds for economic growth.

Besides, investors were cautious about US President Donald Trump’s meeting with North Korean leader Kim Jong Un. The US has also threatened to impose tariffs on auto imports. Also, FPIs had begun profit booking before the Karnataka elections, which was a crucial indicator for the 2019 big election results, he added.

“Another discomfort among the FPI (Category III) was SEBI’s requirement for additional documents from the key people in such a fund. Their concern is around privacy and data theft,” Jain noted. So far this year, FPIs have pulled out over Rs 2,100 crore from equities and withdrawn more than Rs 30,000 crore from the debt market.

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