NEW DELHI: Persistent uncertainty regarding economic recovery and the surge in COVID-19 cases, led foreign portfolio investors (FPI) to pull out of the Indian markets last month after record investments in August. The recent outflows in equities indicates increased heightened volatility in the global markets, according to the Department of Economic Affairs.
"While July and August witnessed record capital raising by leading domestic firms and low global interest rates, net FPI flows moderated to record an outflow of $0.33 billion in September owing to uncertainty around the pace of economic recovery and rising COVID cases in Europe and other countries including India," said the Monthly Economic Review for September 2020.
It also noted that India garnered the highest foreign portfolio inflows in the first half of 2020 compared to its emerging market peers.
Noting that the recent outflows in equities signal heightened volatility in global markets, it said: "However, reversal of selling spree in debt markets in September is a welcome change possibly triggered by low global bond yields."
The report said that on the financing side, net foreign direct investment (FDI) recorded an inflow of $3.3 billion in July compared to an outflow of $0.8 billion in June. Gross inflows increased from $3.6 billion in June to $4.7 billion in July. (IANS)