INSUBCONTINENT EXCLUSIVE:
New Delhi: Foreign investors have pulled out close to Rs 32,000 crore from the Indian capital markets in the first three weeks of this month
due to the ongoing global trade tiff, rising crude prices and higher US treasury yields.
This is much higher than the over Rs 21,000 crore
net outflow seen in entire September
Prior to that, overseas investors had put in a net amount of Rs 7,400 crore in the capital markets (both equity and debt) in
July-August.
According to the latest depository data, foreign portfolio investors (FPIs) sold equities to the tune of Rs 19,810 crore during
October 1-19 and bonds worth Rs 12,167 crore, taking the total to Rs 31,977 crore (USD 4.3 billion).
FPIs have been net sellers almost
throughout this year except a couple of months
However, experts said the swiftness of the exit in October thus far has shaken the market.
Negative sentiments from the global market on
concerns over a slowing world economy led by lingering trade war between the US and China triggered the FPI pullout, said Vinod Nair, Head
of Research, Geojit Financial Services.
The sentiment was also dampened by the International Monetary Fund (IMF) downgrading the outlook for
world economy to 3.7 per cent growth earlier this month.
Alok Agarwala, Senior Vice President and Head Investment Analytics at Bajaj
Capital, attributed the FPI selling to rise in oil prices and US treasury yields and a tightening of global dollar liquidity.
He further
said this is a global phenomena across emerging markets and not limited to India alone
However, the impact of rise in oil prices is higher for India as it imports most of its oil requirement and the matter was further
exacerbated by the ILFS default and the rout in NBFC debt papers, he added.
Vidya Bala, Head of Mutual Fund Research at FundsIndia, said
rising rates in the US, strengthening dollar and higher US earnings have been triggers for money moving out of India and other emerging
markets to the US.
Locally, rising oil price, the recent spate of management-related issues in banks and tightening liquidity in NBFCs have
been immediate triggers.
Going ahead, Bala said volatility can be expected to continue for other reasons too, like US sanctions on Iran
which take effect in November as Iran is a major source of crude oil for India
Besides, India has some key state elections coming up, which could provide cues to FPIs for next year's central elections.
So far this
year, FPIs have pulled out over Rs 33,000 crore from equities and more than Rs 60,000 crore from the debt markets.
