FIIs pull out Rs 186 cr so far this month

Concerns over domestic economic growth and depreciating rupee is leading to the outflow

Foreign investors have pulled out Rs 186 crore from the equity market in the first fortnight this month amid concerns over domestic economic growth and depreciating rupee.

During June 1 to 15, foreign institutional investors (FIIs) made gross purchase of equities worth Rs 24,957.40 crore and sold shares valued at Rs 25,143.50 crore -- a net outflow of Rs 186.30 crore, according to the data available with the market regulator Sebi.

FIIs had pulled out Rs 347 crore from the equity market in May, and Rs 1,109 crore in April.

Market experts attributed the outflow to a slew of reasons such as the depreciating rupee, slowing economic growth, high fiscal and current account deficit as well as lack of economic reforms momentum.

"Foreign investors are staying away from the Indian equity market, despite having an attractive valuation, mainly on account of volatility in rupee, which is hovering around the 56-level against US dollar," a stock broker said.

He pointed out that investors in India are in need of more policy action than liquidity infusion at the moment.

The latest official figure showed that in 2011-12, the country's GDP growth had dropped to 9-year low of 6.5 per cent. The growth in the January-March quarter was only 5.3 per cent, lower than the economist projections.

In June, while foreign investors took out a total of Rs 186.30 crore from stocks, they seem to have gone bullish on the debt market pouring in Rs 1,207 crore. This takes the collective net investment into stocks and bonds to Rs 1,021 crore during the period.

The BSE 30-scrip benchmark Sensex, however, has gained 731 points or 4.5 per cent so far this month to close at 16,949.83 points on Friday.

In the first three months this year, FIIs pumped in huge capital into the equity markets, while the next two months of the second quarter saw them pull out funds from the country.

During January-March, FIIs had invested a record Rs 43,951 crore, but in the next two months they withdrew a total of Rs 1,456 crore.

After taking the latest withdrawals into account, FIIs have made an investment of Rs 42,308 crore into the equity market so far this year and Rs 20,387 crore into the debt market during the same period.

As on June 8, the number of registered FIIs in the country stood at 1,753 and total number of sub-accounts were 6,345 during the same period.