India-focused funds witnessed the outflow to the tune of $455 million last month amid concerns over domestic economic growth and depreciating rupee, says a report.
According to a report by Kotak Institutional Equities, funds dedicated to all the eight emerging markets were in negative in May. These funds together witnessed a pull out of $4.44 billion last month.
The exchange traded funds (ETFs) constituted a significant portion of the total outflows in the emerging countries, which stood at $2.76 billion, the report stated.
Among the countries, China-dedicated funds saw an outflow of $1.29 billion, followed by Brazil ($1.26 billion), Russia ($697 million), South Korea ($561 million) and India ($455 million).
Funds-focused to Indonesia, Thailand and Taiwan taken out money to the tune of $78 million, $52 million, and $41 million, respectively.
Market experts attributed the outflow to a slew of reasons such as depreciating rupee, high fiscal and current account deficit as well as lack of reform momentum.
India dedicated exchange traded funds (ETFs) has seen strong outflows of $361 million last month because of depreciating rupee and sluggish global market scenario.
“Retail investors outside India subscribed to ETF and the retail money flowed into the country through ETFs. These fund flows affects the market movements, when the market sentiment is good, ETF flows follow suite and vice—versa,” a market analyst said.
Meanwhile, as per Sebi data, Foreign Institutional Investors (FIIs) pulled out funds of Rs 347 crore from the equity markets in May. This was the second consecutive withdrawal as FIIs had pulled out Rs 1,109 crore from the stock market in April.