Global funds focused on India have sold shares worth $980 million so far this year, the second highest outflow after $2,668 million from China funds in Asia-Pacific region, according to data compiled by international fund tracking firm EPFR Global.
Even as Foreign Institutional Investors (FIIs) have been selling across markets and pulling out money, their outflow was highest from India in 2011, compared with BRIC peers (Brazil, Russia, India and China) and other emerging markets.
Meanwhile, investors pulled out a record $14.45 billion out of bond funds tracked by EPFR Global, as fears that US monetary policy will tighten in the second half of the year prompted more investors to head for the exits.
Global investors have pulled out a whopping $21 billion (Rs 94,485 crore) so far this year from equity funds in emerging markets, amid rising inflation concerns and continuing political turmoil in the Middle East.
According to the data compiled by the international fund- tracking firm, EPFR Global, all Asia -- excluding Japan -- equity funds surrendered $365 million in early July although they remain committed to investing in India and Russia. At the country level, investors removed $424 million from China Equity Funds and $244 million from Brazil Equity Funds.
India's weight in the emerging market portfolios of foreign institutional investors (FIIs) has risen by about 100 basis points in June to 7.96 per cent as compared to May.
The elements are in place for another strong year.
Overall inflows into emerging market equity funds rebounded during the third week of July as optimism about a recovery in US demand helped many individual equity markets gain between 3 and 8 per cent. The diversified Global Emerging Markets equity funds received $1.08 billion, followed by Asia (excluding-Japan) equity funds which got $973 million.
Global investors have poured in over $794 million in Asia-dedicated equity funds in the first week of April as India-focussed funds broke their 11-week outflow streak.
Investors across the world put in about $60.4 million in India country funds during the first week of April, while China funds attracted the largest in the region of over $377 million, as per to data complied by international fund tracking firm EPFR Global. "Asia ex-Japan Equity Funds enjoyed their best week of the year in early April, absorbing a net $599 million, as investors found some value in China and continued to commit fresh money to Taiwan.
Investors globally pulled out more than $3 billion from equity funds focused on Emerging markets including India in a week amid concerns over the US Federal Reserve's plan of curtailing its stimulus drive starting later this year.
India attracted $1.4 billion FIIs in November, says a report by HSBC.
The domestic market is likely to continue reeling under the sharp bearish tone adopted by overseas investors, with continuing meltdown in global markets like the US and China providing further impetus, analysts believe.
According to the global financial services major, FII flows in May were mixed, with investors being more selective.
Assets under management of India-dedicated funds have slid 20 per cent in the year to November to $35.2 billion.
This was the biggest weekly outflow from emerging market equity funds since early October and has taken the total outflow from these funds since the beginning of 2011 to $39.9 billion, EPFR said.
'Investors hate uncertainty and the demonetisation move certainly creates that.'
During the week ended November 9, emerging market equity funds attracted in $2.1 billion, marking the fourth straight week of inflows.
Global research firm Citigroup, citing data compiled by emerging market fund flow tracker EPFR, said in a report that of the outflows registered by Asian funds, investors put in $209.9 million in China-dedicated funds. Meanwhile, Asian equity funds inflow declined to $46 million in the first week of December, while it was at $350 million in the third week of November.
The net cash raked in by developed market-focused funds was $49.44 billion in the January-June period of the year, compared to an outflow of $34.81 billion in the year-ago period, according to international fund tracking firm EPFR.
The new PN3 norms and lack of clarity on what constitutes beneficial ownership are the primary reasons for the decline in investments from China and Hong Kong.
India remains one of the most over-owned market in Asia.
In the broader market, the BSE Midcap was down 0.2%, while BSE Smallcap fell 0.1%.
Continued outflows amid moderation of domestic investments are a concern
Many giving double-digit returns, with India up less than one per cent; even so, it has done much better than other emerging markets.
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