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Foreign investors take out $1 Billion from Capital Markets in November

Overseas investors have pulled out more than $1 billion from the Indian capital markets since the beginning of the month due to lacklustre quarterly earnings and concerns over a possible rate hike by the Federal Reserve.

The selloff came after foreign portfolio investor (FPI) inflow in the capital markets (equity and debt) had hit a seven-month high in October.

Net outflow in equities stood at Rs. 5,713 crore between November 2 and November 19, while it was Rs. 2,565 crore from debt, translating into a total of Rs. 8,278 crore ($1.26 billion), data compiled by the depositories showed.

FPIs had made a net investment of Rs. 22,350 crore last month, making it the highest investment by investors since March, when they had poured in Rs. 20,723 crore into the Indian market.

The huge inflows during October also reversed the outflows seen during the last two months. FPIs pulled out over Rs. 23,000 crore from the capital markets in the last two months (August-September) on fears of an economic slowdown in China, which triggered a global selloff.

The minutes of latest US Fed meeting showed that it’s ready for a December lift-off provided subsequent actions are strongly tied to consistent improvements in the economy, which prompted investors to withdraw money.

Investors’ mood remained fragile because of disappointing quarterly earnings by blue-chips.

“Lingering concerns about earnings and the worsening global risk environment have prompted FPIs to pull-out from the Indian markets,” said Vijay Singhania, founder-director, TradeSmart Online, a discount brokerage firm.

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