FPIs pull out nearly Rs 400-cr in just 5 sessions on global cues

Foreign investors have pulled put close to Rs 400 crore 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 6,900 crore 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 383 crore from equities from December 3-7.

However, they put in Rs 2,744 crore 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 361 crore 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 85,600 crore from the capital markets so far this year. This includes more than Rs 35,600 crore from equities and Rs 50,000 crore from the debt market.