An analysis of foreign portfolio investor (FPI) data by investor category shows that SWFs withdrew a net sum of Rs 2,537 crore (equity and debt) in January-February of 2017.
Sovereign wealth funds have pulled out more than Rs 2,500 crore from Indian capital markets in the first two months of this year. This is on top of Rs 6,636 crore already being pulled out by such funds for the entire 2016.
A sovereign wealth fund (SWF) consists of pools of money derived from a country’s reserves set aside for investment purposes to benefit the economy and citizens. The funding for such fund comes from central bank reserves that accumulate as a result of budget and trade surpluses, and from revenue generated from exports of natural resources.
An analysis of foreign portfolio investor (FPI) data by investor category shows that SWFs withdrew a net sum of Rs 2,537 crore (equity and debt) in January-February of 2017, Minister of State for Finance Arjun Ram Meghwal said in a written reply to the Lok Sabha.
Besides, foreign government agencies took out Rs 2,273 crore from the country’s markets, he added. Further, net outflow by investment trusts was at Rs 744 crore, international or multilateral organisations (Rs 440 crore), endowment funds (Rs 389 crore), foreign central banks (Rs 346 crore) and university funds (Rs 81 crore).
On the other hand, investment managers and broad-based funds infused Rs 10,614 crore and Rs 5,086 crore in the markets, respectively. Besides, mutual funds, pension funds, and charitable trusts were among other FPIs that poured money.
“FPIs make their own investment decisions. Some of the common factors that influence FPI investment include anticipated future returns out of the proposed investment, risk-taking ability of the FPI concerned, financial, economic and monetary policy scenarios in its own jurisdiction and competitive markets,” Meghwal said. He further said investment objective and mandate of the FPI and other global macro economic and geopolitical factors also influence the decision.
Overall, FPIs invested a net Rs 12,355 crore in the country’s capital markets in the first two months of this year. This included Rs 8,725 crore in equities and Rs 3,641 in debt markets.
The minister said the government in consultation with regulators has taken a number of steps to boost inflow of foreign capital to the country. This includes permitting FPIs to invest in units of real estate investment trusts and infrastructure investment trusts.
Recently, the government has decided to introduce a common application form for registration, opening of bank as well as demat accounts, and issue of permanent account number (PAN) for FPIs, which will greatly enhance operational and flexibility and ease of access to capital markets, Meghwal said.