Overseas investors have pulled out more than Rs. 17,000 crore (about $3 billion) from the Indian capital markets so far this month, amid concerns over the depreciating rupee. The outflows as on 19 July were about Rs. 11,196 crore ($1.87 billion) from the debt market and Rs. 6,005 crore ($1 billion) from equities, according to data on net foreign institutional investment (FII) inflows with market regulator Sebi.
Foreign institutional investors had withdrawn a record Rs. 44,162 crore ($7.5 billion) from the debt and equities markets in June. The weakness in the Indian currency was instrumental in overseas investors exiting the debt markets as the rising cost of hedging a volatile rupee hurts the yield differential the FIIs work with, according to market experts. The rupee slumped to a lifetime low of 61.21 (intra-day) against the dollar on 8 July. Since 30 April, the rupee has depreciated by about 13 per cent. The currency closed at 59.35 against the dollar on Friday.
There has been turmoil in the global markets after the US Federal Reserve said it may taper the $85-billion-a-month bond purchase programme later this year and end it next year if the America’s economic recovery is up to its expectations.
The Fed's ultra-loose monetary policy has driven asset prices higher, including those in emerging markets, and fears are that inflows may be hit if the US monetary stimulus comes to an end.Foreign institutional investment had been aggressive buyers of bonds in the first five months of 2013 on account of higher yields offered by the government and corporate debt. The debt market witnessed a net inflow of almost Rs. 25,000 crore in January-May this year. So far this year, foreign investors have pulled out a net Rs. 20,284 crore ($3 billion) from the debt market, while foreign investment in the country's equity market is a net Rs. 66,173 crore ( $12.5 billion).
As of 19 July, the number of registered FIIs in the country stood at 1,754 and the total number of sub-accounts at 6,413.
Foreign institutional investors had withdrawn a record Rs. 44,162 crore ($7.5 billion) from the debt and equities markets in June. The weakness in the Indian currency was instrumental in overseas investors exiting the debt markets as the rising cost of hedging a volatile rupee hurts the yield differential the FIIs work with, according to market experts. The rupee slumped to a lifetime low of 61.21 (intra-day) against the dollar on 8 July. Since 30 April, the rupee has depreciated by about 13 per cent. The currency closed at 59.35 against the dollar on Friday.
There has been turmoil in the global markets after the US Federal Reserve said it may taper the $85-billion-a-month bond purchase programme later this year and end it next year if the America’s economic recovery is up to its expectations.
The Fed's ultra-loose monetary policy has driven asset prices higher, including those in emerging markets, and fears are that inflows may be hit if the US monetary stimulus comes to an end.Foreign institutional investment had been aggressive buyers of bonds in the first five months of 2013 on account of higher yields offered by the government and corporate debt. The debt market witnessed a net inflow of almost Rs. 25,000 crore in January-May this year. So far this year, foreign investors have pulled out a net Rs. 20,284 crore ($3 billion) from the debt market, while foreign investment in the country's equity market is a net Rs. 66,173 crore ( $12.5 billion).
As of 19 July, the number of registered FIIs in the country stood at 1,754 and the total number of sub-accounts at 6,413.