FIIs pull out Rs 1,700 cr from Indian equities

Starting January, US Fed cut bond purchases to $75 bn from $85 bn

Overseas investors pulled out nearly Rs 1,700 crore from Indian equities in the first week of this month following a further reduction in the bond buying programme by the US Federal Reserve and rising concerns about growth in China.

Thus, Foreign Institutional Investors also turned net sellers of equities in this year. After buying $20 billion worth of stocks in 2013, they have sold equities totalling Rs 953 crore since January.

FIIs were gross buyers of equities worth Rs 13,253 crore and sellers of stocks to the tune of Rs 14,921 crore till February 7, resulting in net outflow of Rs 1,668 crore ($266 million), according to the data of market regulator Sebi.

Market experts attributed the sell-off by FIIs to global events like fears of slowdown in China and further scaling down of the economic stimulus programme for the American economy by the US Federal Reserve.

Starting January, US Fed cut bond purchases to $75 billion from $85 billion. Last week, it decided to cut it by another $10 billion.

Experts also said that the market would not witness strong inflows till the general elections, scheduled for May, are completed in India and the further pumping in of money by FIIs would depend on the formation of the new government.

Overseas investors have also withdrawn Rs 1,829 crore from the debt market this month so far. With the latest pull-out, FIIs investment in the bonds stood at Rs 10,780 crore since the beginning of 2014.

In 2013, overseas investors infused a net amount of Rs 1.13 lakh crore ($20.10 billion) in equities, while they pulled out a net of Rs 50,847 crore ($8 billion) from the bond market.

As of February 7, the number of registered FIIs in the country stood at 1,727 and the total number of sub-accounts was at 6,371.