FIIs withdraw Rs 2,000 cr from Indian equities in a fortnight

Move post further reduction in the bond buying bu US Fed

Overseas investors pulled out more than Rs 2,000 crore from Indian equities in a fortnight following a further reduction in the bond buying programme by the US Federal Reserve.

Thus, Foreign Institutional Investors (FIIs) also turned net sellers of equities this year. After buying USD 20 billion (over Rs 1.23 lakh crore) worth of stocks in 2013, they have sold equities totalling Rs 1,298 crore since January.

FIIs were gross buyers of equities worth Rs 25,573 crore and sellers of stocks to the tune of Rs 27,586 crore till February 14, resulting in net outflow of Rs 2,012 crore (USD 322 million), according to the data of market regulator Sebi.

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

Starting January, the US Fed cut bond purchases to USD 75 billion from USD 85 billion. Earlier this month, it decided to cut it by another USD 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.

However, overseas investors have pumped in Rs 7,372 crore in the debt market this month so far. With the latest pull-out, FIIs investment in bonds stood at Rs 801 crore since the beginning of 2014.

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

As of February 14, the number of registered FIIs in the country stood at 1,727 and the total number of sub-accounts was at 6,380.