FPIs in selling mode; take out Rs 2,300 cr in a week

Pullout follows US Fed chair Janet Yellen's hint of a rate hike; poor service sector output

Foreign investors continued their selling spree and pulled out more than Rs 2,300 crore from the stock markets in the first week of this month after US Fed chair Janet Yellen hinted at a rate hike.

The latest sell-off came after Foreign Portfolio Investors (FPIs) withdrew Rs 7,074 crore from the equities last month. Prior to that, overseas investors had made an investment of Rs 6,650 crore in the stock markets in October.

As per the data compiled by the depositories, net outflow in equities stood at Rs 2,362 crore during December 1-4.

However, FPIs invested a net amount of just Rs 2.81 crore in the debt markets during the same period.

In prepared remarks, Yellen at an appearance before an economic group on Wednesday, said she is "looking forward" to first interest rate hike in nearly a decade, sparking worries that emerging markets may see capital flight.

"Investors are sensing that the era of near-zero interest rates is coming to an end after the Fed chairperson expressed her confidence about the US economy," Geojit BNP Paribas Financial Services Ltd Head-Fundamental Research Vinod Nair said.

In addition, investors' sentiments took a beating after a monthly PMI survey, which showed that services sector output stagnated in November after four straight months of expansion.

The reading fell to 50.1 in November, from an eight-month high of 53.2 in October, as per the business survey conducted by Markit and Nikkei.

So far this year overseas investors have made a net investment of Rs 18,260 crore in equities and Rs 51,347 crore in debt markets.