In the entire 2017, FPIs put in a collective amount of Rs 2 trillion in equity and debt markets
Investors are anxious over the US-China trade tension, a sharp devaluation in yuan and uncertainty over Kashmir issue.
'Life will not improve overnight; it will happen in a gradual manner.'
Two senior ministry officials, who declined to be named, said the aim was to attract more capital flows from wealth funds in West Asian countries.
On the macro front, market participants will closely watch the FY'15 fiscal deficit target
Falling for the third day, Indian rupee on Wednesday weakened by 14 paise to close at over one-week low of 62.02 against the Greenback.
The Budget has to provide for capex on roads, railways, defence and other infrastructure sectors.
Foreign institutional investors pulled out Rs 86.66 crore (Rs 866.6 million) from local stocks on Monday, as per provisional BSE data.
US Fed rate rise raises risk of further drying up of FII flows.
Hiccups in Chinese economy and the overall strength of the dollar will continue to be a drag on the rupee in the coming year
The view among the regulator and the government is that the currency is overvalued
The currency lost six paise on sustained dollar demand from importers.
Indian benchmark indices may witness bouts of volatility this week as traders roll over positions in the derivative segment on expiry of near-month contracts, say experts.
This time, RBI can cut rates to reflect the improved fundamentals and to further shrink the arbitrage window.
Experts believe volatility is here to stay for some time, at least till China stabilises and clarity regarding the US Fed's interest rate move emerges.
The new norms provide an operational framework for FPIs, a new class of overseas investors that club all existing class of investors like foreign institutional investors and Qualified Foreign Investors.
Rupee movement, global cues key for stocks this week: Experts
It can be noted that the rupee lost nearly 7 per cent since the beginning of May as FIIs have pulled out nearly $4 billion from the domestic debt, as bond yields fell on expectation of RBI cutting rates on Monday.
Other losers included HCL Tech, Yes Bank, IndusInd Bank, TCS, ONGC, Bajaj Finance, PowerGrid, Vedanta, Asian Paints, NTPC and Hero MotoCorp, which shed up to 4.07 per cent.
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Else, more capital outflow and pressure on rupee likely.
'...and defensive until the global macro headwinds turn more benign.'
The rupee had shed one paise to end at one-month low of 61.74 against the US dollar in Tuesday's trade.
The rupee recovered from more-than three months low of 63.15 in early trade on dollar selling by banks.
So long as there are concerns about world trade, growth and oil prices, the domestic market will remain volatile.
The rupee's fall against the dollar is bad news for companies which have increased their exposure to foreign currency loans in recent years.
The rupee resumed higher at 61.13 per dollar as against yesterday's closing level of 61.40 at the Interbank Foreign Exchange and strengthened further to 60.90 per dollar before ending at 61.05 per dollar, a gain of 35 paise or 0.57 per cent.
On Wednesday, FIIs sold shares worth Rs 1,573 crore.
If net forex outflows turn out to be relatively high in the next few years, the rupee could depreciate beyond Rs 80 to a dollar by 2022. The causal reasons could, for example, include unmet expectations of FPI and FDI investors about the performance of the Indian economy, sharp rise in prices of imported oil and decrease in FX remittances. The RBI has to ask itself whether guaranteeing future rupee-dollar exchange rates on FX forward contracts is a reasonable way to use its risk-bearing capacity, says Jaimini Bhagwati.
'The variables to watch include the monsoon, resolution of NBFC liquidity issues, GST collections, and NPA resolution.'
NSE Nifty, after shuttling between 10,809.60 and 10,725.90, finished 30.95 points, or 0.29 per cent lower at 10,741.10.
The indices closed with losses for the week, with the Sensex declining 476.14 points, and the broader NSE Nifty falling 155.45 points during the period.
After a volatile session, Sensex closed the day 563 points lower
After one year in power, Prime Minister Narendra Modi is pretty much on the back foot, even if he continues to display bravado in his public pronouncements. He knows within his heart that he has wasted a lot of his political capital without getting much in return, says M K Venu.
The dollar's weakness against rivals overseas supported the rupee.
'Markets are likely to remain choppy for the next 6 months.'
Increased demand from oil importers for the American currency and a weak opening in the domestic stock market also put pressure on the rupee.
The derivatives expiry on Thursday is also expected to add to the volatility.
For existing investors, it may be prudent to redeem their current investments in gilt or dynamic schemes and invest it in short-term funds, if the exit load is not very high, advises Malhar Majumder.
Out of the 30-share Sensex pack, 21 ended lower and one remained unchanged
'India's sizeable forex reserves should help stem a possible fall in our currency.'
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