Overseas investors have pulled out nearly Rs 2,000 crore from the Indian stock markets since the beginning of the month amid concerns over Chinese economy coupled with sharp erosion in the value of rupee.
This was in contrast to a net inflow of Rs 5,319 crore by Foreign Portfolio Investors (FPIs) in equities last month.
The net outflow by FPIs in equities stood at Rs 1,943 crore during August 3- 21, while they invested a net sum of Rs 79 crore in the debt market during the period, which works out to a net outflow of Rs 1,864 crore, according to depository data.
Investors are worried that a key reforms bill on goods and services tax (GST) might get delayed as the government failed to pass it during the monsoon session of Parliament.
Further, widening of trade deficit in the face of sluggish exports and absence of any positive trigger also added to the downtrend.
“Continued depreciation of the rupee, another devaluation of the Chinese currency and subdued corporate earnings for the quarter ended June 2015 weighed on sentiments,” said Hem Securities Director Gaurav Jain.
Besides, India’s exports narrowed for the eighth straight month by 10.3 per cent in July to USD 23.13 billion, widening the trade deficit to USD 12.81 billion. Rupee is hovering around 65.83 against the US dollar.
Since January 2015, overseas investors have invested a net amount of Rs 42,456 crore in equities and Rs 39,430 crore in the debt market.