FPIs pull out nearly Rs 4 bn in 5 sessions on global cues after Huawei case

This comes following a net inflow of over Rs 69 billion in the equity market by Foreign Portfolio Investors on easing crude oil prices and a strengthening rupee

Foreign investors have pulled out close to Rs 4 billion from the Indian stock market in the last five trading sessions amid weakness in global equities due to the arrest of a high-profile Chinese executive.

This comes following a net inflow of over Rs 69 billion in the equity market by Foreign Portfolio Investors (FPIs) on easing crude oil prices and a strengthening rupee.

According to depositories, FPIs withdrew a net amount of Rs 3.83 billion from equities from December 3-7.

However, they put in Rs 27.44 billion in the debt markets during the period under review.

After making a spirited comeback in November, FPIs have once again turned net sellers in the Indian equity markets in the month of December.

"In fact, the sell-off was triggered on Thursday December 6, when FPIs sold net assets worth Rs 3.61 billion in a single day. This could be largely attributed to the weakness in the global markets due to the arrest of a high-profile Chinese executive which led to a sharp fall in the stock markets globally," said Himanshu Srivastava, Senior Analyst Manager Research, Morningstar Investment Adviser India.

"Investors fear that the relationship between the world's two biggest economies -- US and China -- could deteriorate following the arrest and hurt economic growth. Consequently, they chose to adopt a cautious stance and shun risky assets, such as their investments in emerging markets like India, which are more susceptible to weak global cues," he added.

The sell-off by FPIs was triggered after Chinese telecom giant Huawei's CFO Meng Wanzhou, who is also the company founder's daughter, was arrested in Canada for extradition to the US for suspected Iran sanctions violations.

FPIs have pulled out over Rs 856 billion from the capital markets so far this year. This includes more than Rs 356 billion from equities and Rs 500 billion from the debt market.