Over Rs 5,200 Crore of Domestic Equities Sold by Foreign Investors in April

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Foreign Investors Sell Indian Equities Worth Over Rs 5,200 Crore Amid Tax Treaty Concerns




In April so far, foreign investors have offloaded domestic equities worth more than Rs 5,200 crore, driven by apprehensions regarding adjustments in India's tax treaty with Mauritius. This change would subject investments made through Mauritius to heightened scrutiny within India.

The significant outflow follows a substantial net investment of Rs 35,098 crore in March and Rs 1,539 crore in February, as reported by depositories. Data indicates that foreign portfolio investors (FPIs) have recorded a net outflow of Rs 5,254 crore from Indian equities this month, up to April 19.

According to Himanshu Srivastava, associate director and research manager at Morningstar Investment Research India, the principal trigger for FPI selling stems from alterations in India's tax treaty with Mauritius. The amended protocol aims to curtail tax relief utilization for the indirect benefit of residents from other countries. Srivastava notes that many investors using Mauritius entities to invest in Indian markets are from other nations.

Moreover, V.K. Vijayakumar, chief investment strategist at Geojit Financial Services, attributes the FPI selling to hotter-than-expected US inflation and the subsequent rise in bond yields, with the 10-year yield surpassing 4.6 percent. This surge in bond yields triggered significant selling in the Indian market.

Disclaimer: The information provided above serves as a summary of publicly available data and expert opinions. It does not constitute financial advice or a recommendation to buy, sell, or hold any securities. Readers are advised to conduct their own due diligence and consult with financial advisors before making any investment decisions.






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