Shares worth Rs 7,000 cr sold, highest outflow since 1997
Foreign investors have pulled out nearly Rs 7,000 crore from the capital markets in about two weeks mainly on account of a combination of global and domestic issues.
New Delhi: Foreign investors have pulled out nearly Rs 7,000 crore from the capital markets in about two weeks mainly on account of a combination of global and domestic issues. This comes on top of a record net outflow of Rs 17,428 crore from equities last month. This was the highest net outflow by foreign portfolio investors (FPIs) in a single month since 1997.
The segregated data prior to 1997 was not available. FPIs withdrew a net sum of Rs 6,109 crore from equities, while they pulled out Rs 773 crore from the debt markets during September 1-11, according to depositories data. Market experts attributed the huge outflows to sustained global risk-off trend along with concerns over economic slowdown in China and currency devaluation by the world’s most populated country.
Besides, China’s weak PMI and lower GDP growth dampened sentiments in India. Moreover, the stance of the US Fed continued to affect investor sentiment, they added. However, analysts believe that the outflows are unlikely to continue for a long time.
The growth data showed the economy grew at seven per cent in April-June, from 7.5 per cent in the preceding quarter. Not just that, Nikkei India Manufacturing PMI stood at 52.3 in August, as against 52.7 in July, a sign that the sector grew at a slower pace.
Since the beginning of the year, FPIs have made a net investment of Rs 21,413 crore in equities and Rs 37,931 crore in debt markets. In spite of this scenario, the Sensex had done relatively better than most other global indices in August, with a decline of 6.6 per cent.
“It was the third best performing market of the 12 countries selected,” according to a study by CARE Ratings on the global markets that have been on a downward spiral ever since the news of the slowdown in China took centre-stage.
For the entire period, the fall in case of the Sensex was higher than the median and India ranked fifth in the list of markets that went down sharply in the last month preceded behind China, Japan, Hong Kong and Turkey.
( Source : agencies )
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