As per depositories data, the overseas investors pulled out Rs 6,427 crore from equities and Rs 25 crore from the debt segment during May 1-14.
The net outflow during the period under review stood at Rs 6,452 crore.
“The severe Covid second wave, increasing lockdowns and concerns regarding its impact on GDP growth and corporate earnings seem to be behind FPI outflows,” said VK Vijayakumar, chief investment Strategist at Geojit Financial Services.
In the preceding month, the total net outflow from the Indian capital markets (equities and debt) was Rs 9,435 crore.
The real impact on economy is unclear but investors are becoming nervous and cautious, said co-founder and COO at Groww Harsh Jain.
FPIs are now running a concentrated portfolio with high weightage on IT, pharma, select FMCG, and stocks with good earnings visibility, Vijayakumar noted.
“Rising Covid cases in the country and extension of lockdowns could play spoilsport. Moreover, the uncertainty over the degree of impact on the economy could continue to keep foreign investors on the sidelines and can also potentially force FPIs to adopt a wait-and-watch approach,” said Himanshu Srivastava, associate director – manager research, Morningstar India.
The focus for FPIs would continue to be on economic numbers and how soon India gains its economic momentum back. Any surprise on that front can dent sentiments further and adversely impact foreign flows, Srivastava said.