FPIs resume selling ahead of US Fed meet in December

By: | Updated: November 18, 2015 10:21 AM

Foreign portfolio investors (FPIs) have sold equities worth $517 million so far this month, stock exchanges data showed.

FPIs Foreign portfolio investors (FPIs) have sold equities worth 7 million so far this month, stock exchanges data showed. (Photo: Reuters)

Indian equity markets are witnessing another spell of selling by foreign funds ahead of US Fed meet in December where it may raise interest rates. Foreign portfolio investors (FPIs) have sold equities worth $517 million so far this month, stock exchanges data showed.

A slew of foreign direct investment (FDI) reforms announced by the government last week failed to contain  sell-off as FPIs sold equities worth $227 million during the previous two sessions.

On November 10, the government announced relaxation of FDI norms across 15 sectors including defence, banking, construction, single brand retail, broadcasting and civil aviation. The notification also said the Foreign Investment Promotion Board (FIPB) could now clear proposals up to Rs 5,000 crore (compared to Rs 3,000 crore earlier).

Amid concerns over China, overseas investors had sold equities worth $2.57 billion during the first quarter of the current fiscal, making it the worst quarter in nearly seven years. However, October offered some respite to the Street as FPI buying picked up as the Reserve Bank had slashed the repo by 50 basis points. FPIs bought equities worth $877 million during October.

During calendar 2015, FPIs have bought equities worth $4.2 billion, Bloomberg data showed. CY15 will be the worst year since 2011 when FPIs had net sold equities worth $512 million. FPIs have bought equities worth $16.16 billion, $19.75 billion and $24.5 billion in the last three years, data showed.

Nevertheless, India continues to be one of the favored destinations for foreign funds among emerging markets (EMs). Data showed that India received third highest fund flow among Asian and EMs after Brazil and Taiwan. Numerous brokerages have pointed out that India will be an outperformer in the EM space. Morgan Stanley said in a note to investors that India along with Singapore will be favored destination for foreign funds in the near future.

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