Foreign funds on exit route
FPIs have turned net sellers of equities in the past one month
By : DC Correspondent
Update: 2014-10-18 02:42 GMT
Mumbai: Foreign portfolio investors (FPI) have turned net sellers of Indian equities during the past four weeks signalling a short-term trend reversal in market sentiments. This is the first time it has happened since the latest bull market rally started on hopes that the new government under PM Narendra Modi would steer the Indian economy out of the woods.
According to market participants, growing fears about the Euro-zone region again slipping back into recession and a delay in the announcement of further monetary easing by the European Central Bank (ECB) are driving global investors away from riskier assets.
The data sourced from the depositories showed that FPI have offloaded shares worth Rs 3,755.10 crore in October taking their total sales during the past one month to around Rs 6,000 crore.
“Overseas investors are selling mainly to mitigate some of the losses that they have incurred in their commodity market portfolio like crude oil and base metals,” observed Deven Choksey, managing director, K.R. Choksey Shares and Securities. According to him, the sudden sharp fall in the prices of commodities in the global markets has caught global investor’s off-guard.
“They are trying to compensate for those losses by selling emerging market equities where they are sitting on decent profits. If the prices of crude oil stabilises in the international market, we could again see a steady inflow of funds from foreign investors,” Mr Choksey said and added that most of the macro-economic factors have turned in India’s favour at the moment.