INSUBCONTINENT EXCLUSIVE:
New Delhi: Continuing their selling spree, foreign investors have pulled out over Rs 2,000 crore from the capital markets this month so far
on higher crude oil prices and a depreciating rupee.
The latest sell-off comes after foreign portfolio investors (FPIs) withdrew over Rs
61,000 crore from the capital markets in the last three months (April to June)
Prior to that, overseas investors had infused Rs 2,661 crore in March.
As per data compiled by depositories, net outflow in the debt markets
stood at Rs 1,173 crore during July 2-20, while the same in equity was at Rs 858 crore, resulting in a net withdrawal of Rs 2,031
crore.
"Selling by FPIs in the Indian debt markets could be attributed to higher fuel prices which fans fear that the inflation may stoke
This, in turn, could widen the country's current account deficit thus putting pressure on the rupee which has already depreciated almost 8
per cent since the end of January this year," said Himanshu Srivastava, senior research analyst, manager research at
Morningstar.
"Additionally, tightening of policy back in the US also does not augur well for the Indian debt markets
This trend may continue given there are expectations that the US Fed may hike rates further," he added.
Explaining about outflows from
equity markets, Srivastava said higher crude oil prices, increasing retail inflation, depreciating rupee against the US dollar, high chances
of further rate hikes by the US Federal Reserve and fear of global trade war are the key factors behind the trend.
