Foreign Institutional Investors (FII) have turned cautious when it comes to investing in Indian equities, reported Moneycontrol.
This trend is due to various factors including commodity prices, a rise in US treasury yields, strengthening dollar, deteriorating macro-economic parameters and volatile political environment, the report said.
FIIs have withdrawn over Rs 24,000 crore from equity and debt markets in May as per the Sebi data, the report added.
However, what makes the situation even more worrying is the possibility of the situation continuing for a longer period. As per the report, rising borrowing costs in the US will take its toll on foreign investors affecting their involvement in emerging markets like India.
The situation has also affected foreign portfolio investor activities. As per the report, the last quarter of FY18 saw a momentum shift, where preference towards buying was slowly replaced by an interest in selling.