Foreign Institutional Investors FII outflows for the month stood at -US$2.6bn – the highest since Oct ’08, and the third-highest monthly outflows ever.
On a YTD basis, Indian equities remain among the top recipients of FII outflows at US$4.5bn – second only to Brazil at US$6bn. While FIIs were big net sellers, domestic institutional investors [DIIs] were equally strong net buyers at INR162.5bn (~US$2.5bn) – the highest since Jan ’08. This was led by domestic mutual funds [MFs], which net bought INR105bn (US$1.6bn) – the highest monthly buying since at least May ’07, surpassing the earlier record-high of INR103bn posted in June ’15. DIIs ex-MFs (mainly insurance companies) also posted impressive net buying of INR57bn (US$866mn) – the highest since June ’13. Persistently-strong inflows into domestic mutual funds have driven net buying by MFs, but changing global macro equations, its consequent impact on equities and the potential availability of an investment alternative in the form of tax free bond issuances may moderate inflows into domestic MFs.
