Unabated COVID-19 surge spooks foreign investors in India

Summary

  • India’s COVID-19 deaths cross 2,000-mark for first time
  • Foreign funds become net sellers for April
  • Restrictions and lockdown imposed in many of the key Indian cities

The unabated surge of COVID-19 in India has spooked many people, including the foreign investors, even as Indian Prime Minister Narendra Modi tried to allay fears about a new lockdown.

Modi’s 15-minute address on 8.45 pm IST on Tuesday failed to assuage concerns as initial numbers suggest that investors continued the sell-off from Indian markets.

“I also urge the states to consider lockdowns to be the last option and focus more on creating micro-containment zones,” Mr Modi said in his speech, on a day when daily COVID-19 deaths in India surpassed the 2,000-mark for the first time.

Despite this, after the close of Indian markets, the futures of 50-share NSE Nifty, continued to trade on Singapore’s SGX Nifty for eight more hours – which helps investors gauge cues for the next day’s trade. At the time of filing this copy, SGX Nifty was trading down 1.57%.

The foreign investors, which have been net buyers in the Indian markets for six months in a row, have been net sellers till now in April. The foreign funds have pulled out a net of INR 5,312.79 crore (US$703.1 million) from Indian equities. This includes INR 87,398.16 crore (US$11.57 billion) of gross sales and INR 82,085.37 crore (US$10.87 billion) of gross purchases by the foreign investors.

Also Read: Investors lose US$83 billion in one hour in India

The last time foreign investors had been monthly net sellers in the equities of world’s fifth largest economy, was during September 2020. Since then, as India seemed to provide quality play at more reasonable valuations to the global investors, they started flocking in heavily.

Also Read: Indian markets feel the heat as COVID-19 rattles the country

But that changed in April, as second wave caught the world’s second most populous country completely off-guard. Since then, new cases have increased at an astronomical rate, and are nearing 300,000-mark per day.

The new spike has triggered lockdowns in New Delhi and Mumbai, India’s national capital and financial capital, respectively. The surge has also led to weekend lockdowns and restricted movement in India’s IT capital – Bengaluru.

Also Read: Countries move to ban travel from India as COVID-19 unleashes havoc

New restrictions have taken sheen away from Indian economic sentiment – which had begun crawling back towards recovery. It has also stopped sales of the non-essential commodities, like electronic gadgets, in many key cities of India.

Also Read: Asia markets open in green, COVID-19 wreak havoc in India

Despite the pullout by the foreign investors, the markets have not tanked badly, due to the heavy support coming in from the domestic institutional investors.


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