It seems that the volatility in the equity market is here to stay. The foreign investors have withdrawn over Rs 9,300 crores form the Indian Capital markets only in the last four trading session. The reasons are attributed to the depreciating rupee and rise in the crude oil prices.
The latest withdrawal is an addition to the net outflow of Rs 21,000 crore from the capital markets (both equity and debt) in the month of September.
The amount of withdrawn money in the last four sessions is significant in the way that net amount of money infused by the foreign investors for the month of July-August was Rs 7,400 crore.
The latest depository data shows that foreign portfolio investors (FPIs) have flushed out a net sum of Rs 7,094 crore from equities during the first five days in the month of October. Similarly, FPIs have pulled out Rs 2,261 crore from the debt market, taking the total to Rs 9,355 crore.
The FPIs have been net seller throughout the calendar year except for only two months but the rate with it is pulling out money from the market has sent shock waves in the market.
Senior Vice President and Head Investment Analytics at Bajaj Capital, Alok Agarwal has said that "Rise in oil prices and US treasury yields and a tightening of global dollar liquidity are the key reasons for the FPI selling as they have induced high volatility in currency, bond and equity markets. One must, however, remember that this is a global phenomenon across emerging markets and not limited to India alone. Of course, the impact of rising in oil prices is higher for India as it imports most of its oil requirements. The matter was further exacerbated by the IL&FS default and the rout in NBFC debt papers."
To this time of the year, the FPIs have pulled out more than 50,000 crores from the debt markets, however, the numbers are lesser for the equities as it stands at Rs. 20,000 crores.