FPIs remain in sell-off mode, pull out Rs 9,197 cr in August so far
Given the situation, earnings growth is moderating while valuation is expanding. As a result, equity is losing its attractiveness as an investment class and funds are shifting to safe-haven assets like bonds and gold, Vinod Nair, head of research at Geojit Financial Services
Continuing with their selling spree, foreign investors pulled out a net amount of Rs 9,197 crore in just seven trading sessions in August due to unconducive domestic and global factors.
However, analysts said the trend may reverse if the government addresses the tax concerns of overseas investors.
According to latest depositories data, foreign portfolio investors (FPIs) withdrew a net amount of Rs 11,134.60 from equities while pumping in Rs 1,937.54 into the debt segment during August 1-9, taking the total net withdrawal to Rs 9,197.06 crore.
In the preceding month, FPIs were net sellers in the Indian capital markets (equity and debt) to the tune of Rs 2,985.88 crore.
Overseas investors have been on a selling spree ever since higher tax on FPIs registered as trusts and association of persons was announced in the Union Budget for 2019-20, experts said.
According to Vinod Nair, head of research at Geojit Financial Services, FPIs have been cautious due to slowdown in the global economy, with the US, Euro economies and China posting muted GDP growth numbers. There are fears that this slowdown can get extended given the uncertainty on the US-China trade agreement, Brexit and other geopolitical issues.
Given the situation, earnings growth is moderating while valuation is expanding. As a result, equity is losing its attractiveness as an investment class and funds are shifting to safe-haven assets like bonds and gold, he added.
Himanshu Srivastava, senior analyst manager research at Morningstar, said, "While there has been a marked slowdown in the country's economic activity, sub-par monsoon and weak earning season, globally, tension between US and Iran and continued trade war between US and China too hasn't augured well for India,"
However, "there is still a ray of hope for FPIs as the talks are going on that the government may consider rolling back or providing some relief to foreign investors from higher surcharge," Srivastava added.
10 most valued Indian companies together added Rs 87,965.88 crore in market valuation
Seven of the 10 most valued Indian companies together added Rs 87,965.88 crore in market valuation last week, with HUL and HDFC Bank topping the chart.
While Tata Consultancy Services Ltd (TCS), HDFC, Infosys, Kotak Mahindra Bank and ICICI Bank were the other firms which saw a rise in their market capitalisation (m-cap) for the week ended Friday, RIL, ITC and SBI suffered losses.
The m-cap of Hindustan Unilever Limited (HUL) zoomed Rs 22,145.92 crore to Rs 3,98,290.92 crore and that of HDFC Bank jumped Rs 18,264.93 crore to Rs 6,23,892.08 crore.
HDFC's valuation advanced Rs 15,148.15 crore to Rs 3,81,619.34 crore and that of TCS rallied Rs 14,840.68 crore to Rs 8,42,635.51 crore.
Infosys gained Rs 6,335.19 crore to reach Rs 3,39,372.78 crore in market valuation, while that of ICICI Bank went up by Rs 6,237.72 crore to Rs 2,71,360.08 crore.
The valuation of Kotak Mahindra Bank rose by Rs 4,993.29 crore to Rs 2,92,866.47 crore.
In contrast, the m-cap of State Bank of India (SBI) dropped Rs 15,261.1 crore to Rs 2,60,018.56 crore and that of Reliance Industries Ltd (RIL) tumbled Rs 14,072.8 crore to Rs 7,36,602.08 crore.
ITC's valuation declined by Rs 12,606.9 crore to Rs 3,12,146.38 crore.
In the ranking of the top-10 firms, TCS remained at the number one position, followed by RIL, HDFC Bank, HUL, HDFC, Infosys, ITC, Kotak Mahindra Bank, ICICI Bank and SBI.
During the last week, the Sensex gained 463.69 points or 1.24 per cent.