FPI pulls out from bourses in October
The subdued activity by overseas investors has also capped a major upside in both Sensex and Nifty.
Mumbai: Foreign portfolio investment (FPI) into domestic equities have seen a major setback during the current month following the uncertainty around the outcome of the US presidential election in November and the possibility of an interest rate hike by the US Federal Reserve by the end of this year.
After investing heavily during the last few months, foreign investors have turned net sellers to the tune of Rs 567 crore in October, their first monthly sales in last eight months.
The subdued activity by overseas investors has also capped a major upside in both Sensex and Nifty. However, the BSE small and mid cap indices have managed to hit new highs in October on the back of sustained investment by domestic investors.
“Some of the smart hands are making a pre-emptive move ahead of major events in the coming days. Apart from the US presidential election and US Federal Reserve meet, what is also bothering overseas investors is the depreciation in emerging market currencies against the US dollar. Till date, the Indian rupee has managed to remain stable and outperform its peers.
However, with Chinese Yuan showing weakness along with other EM currencies, investors believe that the Indian rupee would also come under pressure. So smart investors are booking profits when the going is good,” noted Ambareesh Baliga, independent research analysts.
However, Emerging Portfolio Fund Research pointed out that the EPFR -tracked emerging market equity funds took in fresh money for the 15th time in the past 16 weeks despite a fresh bout of uncertainty.