Offshore funds pull out $1 billion last quarter

Our Bureau Mumbai | Updated on November 19, 2019

Records six consecutive quarter of net outflow

India-focussed offshore funds witnessed sixth consecutive quarter of net outflow of $1 billion in the September quarter against and outflow of $321 million in the same period last year.

Over the last one year ended September, this fund have seen outflows of $5.2 billion.

The outflow from offshore ETFs (exchange traded funds) was at $320.9 million in the September quarter. After witnessing net outflows for seven quarters in a row, these ETFs received a breather in the June quarter by recording a net inflow of $383.7 million, but it was short-lived, according to Morning Star report.

Also read: FPIs infuse ₹19,203 cr into capital markets in November so far

Uncertainty, hope and despair — the three moods of investors were effectively captured by the Indian equity markets through the quarter ended September 2019, said the report.

Consistent net outflows dented the asset base of India-focussed offshore funds and ETFs to $49.1 billion from $52.9 billion recorded in the previous quarter.

All three segments -- large-, mid- and small-cap funds were in negative zone. The BSE Sensex was down by 1.85 per cent while the BSE Midcap and BSE Smallcap indexes were down 4.76 per cent and 7.50 per cent, respectively.

The India-focussed offshore funds also declined by 4.61 per cent during the September quarter while the dollar-denominated MSCI India dollar Index fell by 1.71 per cent.

The major setback was the additional surcharge introduced on foreign portfolio investors in the Budget, which triggered a massive sell-off by FPIs in the Indian equity markets. This, along with discouraging domestic corporate earnings, the slow progress of monsoon and weak domestic auto sales numbers dragged the markets down, said the Morning Star report.

The assets of other regionally diversified equity funds and ETFs decreased to $6.21 trillion in September quarter against $6.41 trillion recorded in the previous quarter. Value of investment into Indian equities by foreign funds fell to an estimated $178.8 billion against $188.8 billion recorded in the previous quarter.

Gross Domestic Product slipped to 5 per cent in the first quarter of this fiscal, which was the slowest in more than six years. Markets went for a tailspin after the Reserve Bank of India lowered the economic growth estimate to 6.9 per cent amid a slowdown in demand and investments.

Published on November 19, 2019

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