You are here: Home » Markets » News
Business Standard

FPIs withdraw Rs 5,900 cr from equities in December due to volatile market

According to the depositories data, FPIs withdrew a net Rs 5,883 crore from equities during December

Press Trust of India  |  New Delhi 

India on track to knock Britain out of world's top 5 economies

have pulled out close to Rs 5,900 crore from domestic equities this month, with widening fiscal deficit and higher crude prices making market participants cautious on

In spite of December performance, (FPIs) ended the year with a net inflow of over Rs 51,000 crore.

Market experts, however, believe may not be able to repeat this showing in 2018 as withdrawal of liquidity and in developed economies pick up.

According to the depositories data, withdrew a net Rs 5,883 crore from equities during December.

However, such investors had put in Rs 2,350 crore in the debt during the period under review.

The outflow comes following an eight month high inflow of Rs 19,728 crore in November, mainly on account of the government's plan to recapitalise and surge in India's ranking in the World Bank's ease of doing business.

This also marked the highest net investment by since March, when they had poured in Rs 30,906 crore in the equity market.

"Rising crude prices and widening fiscal deficit have prompted them to adopt a cautious stance. In addition to that, appreciating rupee and rising domestic too provide a good profit booking opportunity to them, especially before Christmas and New Year," said Morningstar India's senior analyst manager (research) Himanshu Srivastava.

As per the recently released data, India's fiscal deficit rose to 96.1 per cent of the full-year target by the end of October. The fiscal deficit data, which was released on November 30, overshadowed a resounding GDP growth of 6.3 per cent for September quarter, which was also released on the same day.

Overall, it has been a tremendous journey for the Indian equity in the calendar year 2017. After taking a break from buying into Indian equities in the months of August and September and returning cautiously in October, FPIs' bought Indian equities in abundance in the month of November. However, they withdrew funds in this month.

"Given 2019 would not be far, the expectation of some other economic reforms from the government would be high. But the major for going ahead would be to see growth coming back in the domestic economy, which has not yet picked up contrary to the expectation," Srivastava added.

First Published: Sun, December 31 2017. 11:58 IST
RECOMMENDED FOR YOU