BUSINESS

FPIs pull out almost Rs. 400-cr. in 5 sessions on global cues

Bearish mood:After making a comeback in November, FPIs have again turned net sellers in equity in December.AFP

Bearish mood:After making a comeback in November, FPIs have again turned net sellers in equity in December.AFP  

Sell-off triggered by arrest of Chinese telecom major Huawei’s CFO

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 more than Rs. 6,900 crore in the equity market by Foreign Portfolio Investors (FPIs) in November 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.

Investing in debt

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 — U.S. 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 FPIs’ sell-off was triggered after Chinese telecom giant Huawei’s CFO Meng Wanzhou, who is also the firm’s founder’s daughter, was arrested in Canada for extradition to the U.S. for suspected Iran sanctions violations.

FPIs have pulled out over Rs. 85,600 crore from the capital markets so far this year.

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