FPIs withdraw Rs 3,500 cr from equities in a fortnight

Concerns of renewed worries over health of Chinese economy and fall in crude prices trigger the move

Overseas investors pulled out close to Rs 3,500 crore from the Indian equity markets in the New Year on concerns of renewed worries over the health of Chinese economy and sharp fall in crude oil prices.

However, these investors continue to remain bullish on the Indian debt market and invested a net amount of Rs 3,239 crore during the period.

According to data available with depositories, Foreign Portfolio Investors (FPIs) infused a gross amount of Rs 36,368 crore into equity markets in January 1-15, while they pulled out Rs 39,852 crore during the same period, resulting in a net outflow of Rs 3,483 crore ($520 million).

Capital poured in by the FPIs is often referred to as 'hot money' because of its unpredictability, although they continue to remain among the most important drivers of Indian stock markets.

Market experts attributed the outflow from the stock markets to several negative factors such as concerns over China's growth, crude falling below $31 to 12-year lows and weak IIP data.

The outlook for the Chinese economy and the ongoing collapse in oil prices have triggered FPIs to pull-out money from the stock market.

A contraction in industrial production in November also dampened investors' sentiments.

FPIs, which stayed away from the debt markets during the period under review, invested money in the debt market mainly on account of positive outlook for the Indian rupee.

In 2015, FPIs had infused a net amount of Rs 17,806 crore in equities and Rs 45,856 crore in the bond markets.