Foreign investors pulled out Rs 6,300 crore from domestic equities in April due to changes in India’s tax treaty with Mauritius and a continuous rise in US bond yields. According to depository data, there was a huge investment of Rs 35,098 crore in March and Rs 1,539 crore in February. The data showed that foreign portfolio investors (FPIs) have pulled out Rs 6,304 crore from Indian equities this month till April 26. Apart from this, during the period under review, foreign investors withdrew Rs 10,640 crore from the bond market i.e. debt market.
Earlier, foreign investors had invested Rs 13,602 crore in March, Rs 22,419 crore in February and Rs 19,836 crore in January.
VK Vijayakumar, chief investment strategist, Geojit Financial Services, said, “Continual rise in US bond yields led to fresh outflows by FPIs in both equities and bonds. The 10-year bond yield there is now around 4.7 percent, which is very attractive for foreign investors.
Himanshu Srivastava, Joint Director, Morningstar Investment Research India, said that under India’s tax treaty with Mauritius, the changes on investments made from there in India are troubling foreign investors. Apart from this, uncertainty in macroeconomic signals and interest rate outlook as well as weak signals from global markets are increasing the challenge for emerging markets, he said.
