Coronavirus Scare: Foreign Investors Set To Turn Net Sellers In Equity Markets This Month

Foreign institutional investors have pulled out a net Rs 12,478.31 crore – or $1.71 billion – from domestic equities so far this month. That makes March the first month following six straight months of foreign portfolio investors (FPI) and foreign institutional investors remaining net investors in the Indian equities. Before the current month, it was only in July and August last year that FPIs turned out to be net sellers of Indian equities. According to data from National Securities Depository, foreign investors dumped Indian equities on each of the six trading sessions so far this month, with net outflows totalling Rs 12,478.31 crore.

Tracking a global selloff as investors worldover assess the severity of coronavirus (COVID-19) epidemic and whether the outbreak will push major economies into recession, domestic stock markets have slumped almost 7 per cent so far this month.

The S&P BSE Sensex index has lost 2,662.34 points and broader NSE Nifty 50 benchmark has given up 750.3 points during this period, marking a slump of 6.95 per cent and 6.70 per cent respectively, BSE data shows.

Before the current bearish trend emerged in foreign investment flows, FPIs were in a bullish mode starting September last year.

From September to February, foreign investors were net purchasers to the tune of Rs 66,428 crore in the domestic equity markets, with inflows averaging Rs 11,071 crore each month, according to NSDL data. During that period, the Sensex rose 2.58 per cent (964.50 points).

At the current juncture, the domestic markets are mirroring the rout in global peers, the recent wild movement in crude oil prices and the turmoil in the financial sector in the backdrop of Yes Bank crisis and these factors are keeping investors on the back foot, say analysts.

Equities in other Asian markets have also faced sharp outflows. MSCI’s broadest index of Asia-Pacific shares outside Japan has declined 3.47 per cent so far this month, and is down 11.8 per cent so far this year, after rising about 16 per cent in 2019.

Overseas investors have sold a net $9 billion worth of Asian equities so far this month, after offloading $5.6 billion last month, news agency Reuters reported citing data from stock exchanges in India, Indonesia, Philippines, South Korea, Taiwan, Thailand, and Vietnam.

Economists say the coronavirus outbreak is expected to take an economic toll in Asia given its trade and production linkages with China.

Back home, financial markets remained shut on Tuesday on account of the Holi holiday, and will resume trading on March 11.