Indians’ overseas spend on equity, debt zooms 73% in March amid plunge in US stocks

NEW DELHI: After significantly increasing their pace of spending on international equities and debt in the previous financial year, Indians have again stepped up such expenditure in March, Reserve Bank of India data showed.

Data on outward remittances for resident individuals under the RBI’s liberalised remittance scheme showed that investment in equity and debt was at $104.51 million in March, 2022, up 73 per cent from $60.39 million a month ago, data in the central bank’s May 2021 Bulletin showed.

On a year-on-year basis domestic spending on international equity and debt was up 15 per cent, the data showed. In January 2022, the figure was at $73.53 million.

For the previous financial year as a whole, outward remittances in equity and debt under the LRS scheme skyrocketed 58 per cent to $746.57 million.

The rise in international investments comes amid a record surge in outward remittances as a whole in the previous financial year.

Outward remittances under the scheme were at an all-time high of $19.61 billion in 2021-22 (April-March), up 55 per cent from 12.68 billion the previous year.


BARGAIN HUNTING?
While the data gives neither a break-up of investments in debt and equity nor which markets the funds flowed to, the period during which the outward remittances occurred stands out as one of the most volatile witnessed by global stock markets in recent history.

With markets globally being hammered by multiple headwinds including the effects of the Russia-Ukraine conflict and an aggressive pace of rate hikes signalled by the US Fed, the Dow Jones Industrial Average has slumped 10 per cent since March 31, 2022.

The tech-heavy Nasdaq index has suffered a far greater fall over the same period, shedding a whopping 20 per cent.

Over the same period, the BSE Sensex has also declined 10 per cent, while the NSE Nifty has given up 7 per cent. Interestingly, in the period beginning April 1, the Indian rupee has depreciated 2 per cent versus the US dollar, plumbing new record lows.

Analysts were of the view that the sharp declines in US stock markets could have been a key factor driving outward remittances in international financial markets, with investors perhaps looking to cash in on relatively cheaper assets.

“The steep fall in the global markets, especially in the American markets, led by the growth stocks on Nasdaq possibly could have prompted financial advisors in India to ask their clients to increase the allocations for equities overseas,” independent market analyst Ajay Bodke told ETMarkets.

“Prima facie, this looks to be plausible - when you have Amazon falling by 30 per cent and Apple falling by around 25 per cent, why not inch up the allocation in the American equities?”

The RBI introduced the LRS scheme in 2004. Under the scheme, individuals can invest $25,000 per financial year for a current or capital account transaction.