Since October, FPIs have sold over $26 billion worth of stocks, which is the largest selling ever seen in India, observes Akash Prakash.
Besides higher tax outgo, P-note issuers are worried about operational difficulties
The reduction in holdings comes at a time when technology firms are facing cross currency headwinds due to volatility in the global financial markets
The 50-share Nifty scaled a high of 10,207.90 intra-day but succumbed to profit-booking to finish at 10,184.15, up 53.50 points
Park only savings that need not be touched for many years, says Devangshu Datta.
The move will increase working capital requirement for brokers, raise the work load on the system and will leave little room for contingencies.
Analysts said even though the Indian economy is expected to slow down to 7.2 per cent in fiscal 2020, it is still the best bet for investment for foreign investors.
Sanjiv Puri, chairman and managing director of ITC, is looking to expand the conglomerate's play outside India by taking "strategic positions" in markets close to home in the non-cigarette fast-moving consumer goods (FMCG) and hospitality businesses. In a recent conversation with Business Standard, Puri revealed that ITC is setting sights beyond India's borders. "We already export to 100-odd countries. We want to scale that up and take some strategic positions in markets close to us," he said.
The biggest losers of the session include Reliance, Infosys, TCS, ICICI Bank, HDFC twins, ITC, Maruti, L&T, HUL, Axis Bank, Wipro and IndusInd Bank, cracking up to 4 per cent.
Investor sentiments remained upbeat tracking global developments as the US, China geared up for trade talks due this week.
'In the overall global portfolio, India's weighting has come down in the past seven months.'
The rupee on Wednesday strengthened by another 3 paise to 62.82 against the US dollar.
The 50-share NSE Nifty after moving between 10,374.30 and 10,307.30 settled flat at 10,348.75, up 6.45 points, or 0.06 per cent.
Late selling in realty, PSU and infrastructure stocks mainly dragged the market from early highs.
Appreciating rupee against the dollar and fresh buying by domestic institutional investors added to the momentum
Global funds have pumped in over Rs 38,000 crore (about $5.5 billion) into domestic equities since February 20, helping the Sensex rebound 2,671 points, or 7.6 per cent, from its 2019 low.
Illustration: Uttam Ghosh/Rediff.com After a brief respite at the year's start, FPIs have dumped shares worth more than $5.7 billion (Rs 42,596 crore), taking the cumulative net outflows since October to $10.5 billion (Rs 78,466 crore), and adding to the volatility on the bourses. The figure would have been a lot worse had it not been for net purchases to the tune of $5.7 billion in the primary market from October to date.
Overseas investors, as well as other key stakeholders, such as brokers, custodians, and clearing corporations, are yet to iron out critical issues, even as the shift towards a shorter trade settlement cycle approaches new phases. Several industry players said foreign portfolio investors (FPIs) are still facing impediments over the trade confirmation timelines, foreign exchange (forex) bookings, and pre-funding requirements. This could potentially act as a roadblock when it comes to moving entirely to the new T+1 settlement cycle from next year.
Both the indices closed at five-month highs, led by financial services, IT and metal stocks, amid persistent foreign fund inflows.
The biggest gainers on both the bourses were Reliance Industries, Infosys, NTPC, ONGC, HUL, PowerGrid, Asian Paints, ITC and HCL Tech, rising up to 2 per cent.
After a a steep fall last week, the rupee has closed slightly stronger against the dollar.
The People's Bank of China has picked up a 0.006 per cent stake in ICICI Bank by investing Rs 15 crore in the private sector lender's Rs 15,000 crore qualified institutional placement (QIP) exercise which concluded last week.
The rupee had plummeted to over three-month low of 63.32.
Domestic markets are also aided by a rally in the global markets with US market surging to record high and a firming trend at other Asian bourses.
For the 50-share NSE Nifty, the close came in at 10,739.35, higher by 47.05 points, or 0.44 per cent
The broader Nifty declined by 73.90 points, or 0.71 per cent, to end at 10,378.40.
In the past few years, MFs have emerged as significant institutional buyers, often offsetting the selling by FPIs.
The mid-cap index fell while small-cap advanced.
A complex holding structure and unrelated businesses clubbed under one roof could have been the reasons that prompted investors to shun the stock, experts say. These are likely to impact the company's ability to raise funds, too, they add.
The local currency had surged 18 paise to 63.64 in Thursday's trade.
The clarification by the National Securities Depository (NSDL) - which is tasked with monitoring foreign portfolio investor (FPI) investment in domestic stocks - that the accounts of top investors in Adani group stocks remain 'active' has helped prevent a $500-million selloff of shares. Analysts said a freeze of the FPI accounts, as reported by some media outlets, could have prompted global index providers to cut weighting of four Adani group companies from their global indices. Brian Freitas, an analyst at independent research provider Smartkarma, said if the FPI accounts were indeed frozen, FTSE and MSCI would have reduced weighting of Adani group companies at the next rebalance, since it would have meant that the large part of the free float was not tradeable.
India's weight in the emerging market portfolios of foreign institutional investors (FIIs) has risen by about 100 basis points in June to 7.96 per cent as compared to May.
Every Rs 1-cr FII inflow has coincided with a Rs 11-cr investor wealth erosion.
Even though option to invest as a company is available, many FPIs have chosen trust route to enjoy less tax or zero tax through tax havens such as the Cayman Islands and Luxembourg.
P-note is, however, now not a preferred route for investing in India as Sebi has made registration easier and also desirable for FPIs.
The auction follows aggregate overseas investments in government debt securities yesterday reaching Rs 1,21,271 crore (Rs 1,212.71 billion), which is 97.46 per cent of total permitted limit of Rs 1,24,432 crore (Rs 1,244.32 billion).
Among sectoral indices, telecom led the chart, spurting 3.08 per cent, followed by oil and gas.
After Bandhan MF's US Treasury Bond 0-1 year Fund of Fund (FoF), Aditya Birla Sun Life (ABSL) MF has come out with US Treasury 1-3 Year Bond ETFs FoF and 3-10 Year Bond ETFs FoF. US bonds, which generally offer low yields, have turned attractive post the 525-basis point hike in US interest rates. According to Bloomberg data, the 1-year and 2-year US treasury yields now stand at 5.4 per cent and 5.1 per cent, respectively. Although the yields remain lower than what Indian government bonds offer, the differential has come down steeply.
The NSE Nifty too breached the 11,500-level with a jump of 145.30 points.
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