NEW DELHI, July 28 (PTI): Overseas investors have pulled out nearly Rs
185 billion from the Indian capital markets so far this month, amid
concerns over the US Fed policy and the depreciating rupee.
The outflows as of July 26 were about Rs 120.81 billion from the debt market and Rs 63.94 billion from equities, according to data on net FII investments with market regulator Securities and Exchange Board of India (Sebi).
Foreign institutional investors (FIIs) had withdrawn a record Rs 441.62 billion from the debt and equities markets in June.
The weakness in the Indian currency was instrumental in overseas investors exiting the debt markets as the rising cost of hedging a volatile rupee hurts the yield differential the FIIs work with, according to market experts.
The rupee slumped to a lifetime low of 61.21 (intra-day) against the US dollar on July 8. Since April 30, the rupee has depreciated by about 13 per cent. The currency closed at 59.04 against the dollar on Friday.
That apart, there was turmoil in the global markets after the US Federal Reserve said it may taper the USD 85-billion-a-month bond purchase programme later this year and end it next year if the US economic recovery is up to its expectations.
The Fed's loose monetary policy has driven asset prices higher, including those in emerging markets, and fears are that inflows may be hit if the US monetary stimulus comes to an end.
FIIs had been aggressive buyers of bonds in the first five months of 2013 on account of higher yields offered by the government and corporate debt. The debt market witnessed a net inflow of almost Rs 250 billion in January-May this year.
So far this year, foreign investors have pulled out a net Rs 211.69 billion from the debt market, while foreign investment in the country's equity market is a net Rs 657.85 billion.
As of July 26, the number of registered FIIs in the country stood at 1,756 and the total number of sub-accounts at 6,426.
The outflows as of July 26 were about Rs 120.81 billion from the debt market and Rs 63.94 billion from equities, according to data on net FII investments with market regulator Securities and Exchange Board of India (Sebi).
Foreign institutional investors (FIIs) had withdrawn a record Rs 441.62 billion from the debt and equities markets in June.
The weakness in the Indian currency was instrumental in overseas investors exiting the debt markets as the rising cost of hedging a volatile rupee hurts the yield differential the FIIs work with, according to market experts.
The rupee slumped to a lifetime low of 61.21 (intra-day) against the US dollar on July 8. Since April 30, the rupee has depreciated by about 13 per cent. The currency closed at 59.04 against the dollar on Friday.
That apart, there was turmoil in the global markets after the US Federal Reserve said it may taper the USD 85-billion-a-month bond purchase programme later this year and end it next year if the US economic recovery is up to its expectations.
The Fed's loose monetary policy has driven asset prices higher, including those in emerging markets, and fears are that inflows may be hit if the US monetary stimulus comes to an end.
FIIs had been aggressive buyers of bonds in the first five months of 2013 on account of higher yields offered by the government and corporate debt. The debt market witnessed a net inflow of almost Rs 250 billion in January-May this year.
So far this year, foreign investors have pulled out a net Rs 211.69 billion from the debt market, while foreign investment in the country's equity market is a net Rs 657.85 billion.
As of July 26, the number of registered FIIs in the country stood at 1,756 and the total number of sub-accounts at 6,426.
Blogger Comment
Facebook Comment