In May, Indian equity markets experienced the highest outflows in Asia, with foreign institutional investors (FIIs) withdrawing a substantial $2.89 billion. With this, it marks the largest monthly FII outflow since January 2024.
Furthermore, marking the most severe selloff among Asian markets, provisional data from the National Stock Exchange (NSE) shows that foreign investors have pulled out approximately Rs 24,000 crore from Indian markets this month.
Also on the 30th May, FIIs dramatically increased their net shorts from 5,000 contracts to 2.97 lakh contracts. This was done in a single session. Concurrently, dropping from 257,000 contracts to 51,000, FIIs reduced their long positions by 80%.
This significant reduction which has caused the FII long-short ratio to plummet to just 13 percent from 50 percent in one day, this reflects heightened caution ahead of the highly anticipated general election’s results.
Also, FIIs net sold a total of Rs 19,417 crore in Indian equities, which included INR 3,050 crore in cash, INR 7,925 crore in index futures, and lastly INR 8,442 crore in stock futures.
With this, it marks the biggest outflow in the Indian market since the starting of this year 2024. Also to note, FIIs have been continuously selling Indian equities, with only two sessions of net buying in the month of May. This further indicates a significant shift as FIIs reposition their portfolios prior to the Lok Sabha election results.
FIIs in Other Emerging Markets
FIIs have also withdrawn substantial amounts from other Asian markets beyond India: USD 700 million from Indonesia, USD 210 million from Thailand, USD 415 million from Vietnam, and USD 58 million from the Philippines. And to lastly add, FIIs have made significant strides when it comes to investments in other regions. This has injected USD 7.59 billion into Japan, USD 1.44 billion into South Korea, USD 6.26 billion into Taiwan, and more than USD 500 million into Malaysia.
