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FIIs pull out Rs 6,500 cr from stocks

Foreign funds have pulled out the amount from Indian stocks in November so far.

Written by ENS Economic Bureau | Mumbai |
November 30, 2011 12:49:43 am

Foreign funds have pulled out Rs 6,500 crore from Indian stocks in November so far,amidst concerns of worsening euro zone debt crisis,the depreciation in the rupee,fall in corporate profits and delay in economic reforms. With this,the total foreign institutional investor (FIIs) withdrawals in 2011 so far have touched Rs 24,500 crore,as per figures available with the stock exchanges.

On Monday,when the Sensex recovered by 472 points,FIIs pulled out Rs 302 crore. On Tuesday,they sold another Rs 320 crore. The Sensex,however,managed to retain the 16,000 level by closing at 16,008.34 — down 158.79 points or 0.98 per cent. A major reason for the sustained fall in the rupee value against the dollar is FII withdrawals. The rupee on Tuesday closed down by 7 paise to settle at 52.02/03 on weakness in local stocks amid fresh dollar demand from importers.

On the other hand,Vietnam,Thailand,Indonesia and Taiwan had attracted modest inflows. Japan-focused equity funds managed to attract modest inflows despite the yen’s persistent strength and the pain that is causing key export plays. Apart from emerging market equity funds,funds dedicated to Europe,the US and Latin America were under pressure and saw outflows. Among the Asia excluding funds dedicated to Japan,funds focused to China and Korea too witnessed outflows,global fund-tracking agency EPFR has said.

Investors globally pulled out $2.7 billion from the emerging market focussed funds during the week ended November 23. This was the biggest weekly outflow from emerging market equity funds since early October and has taken the total outflow from these funds since the beginning of 2011 to $39.9 billion,EPFR said. “Emerging markets equity fund groups and sub-groups struggled in the face of the headwinds flowing out of developed Europe during the third week of November,” it noted.

EPFR further said in its report that “the direct proximity of key markets to the euro zone kept the pressure on emerging market equity funds ahead of a ratings downgrade for Hungarian debt that took it into “junk” territory and speculation that Russia’s economy faces a credit squeeze.” The EPFR did not disclose India-specific fund outflow data.

Most of emerging market focussed equity funds invest in India as FIIs and the capital flows through this route are a key factor in the stock market trends here. Overall,the global equity funds saw a net outflows of $15.6 billion for the week ended November 23,taking the year-to-date total to over $100 billion mark.

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