2018 in review: Why foreign investors gave India a miss this year
The year which saw heightened volatility in the Indian market weakened the rationale for foreign investors to infuse their funds into Indian bourses.
- Dec 24, 2018,
- Updated Dec 24, 2018 6:53 PM IST
The year 2018 will probably be remembered as the darkest for the foreign institutional investors (FIIs) in terms of ouflows from the Indian capital markets. The year which saw heightened volatility in the Indian market weakened the rationale for foreign investors to infuse their funds into Indian bourses.
Foreign investors were extremely bullish on the Indian market in 2017 and infused over Rs 2 lakh crore, the highest into Indian equity and debt markets during any calender year.
In 2017, Sensex gained 29.58% while the NSE Nifty rose 30.28%.
This year, foreign investors pulled out a record Rs 81,912 crore from the equity and debt segments of the Indian market.
The amount denotes the highest ever outflows by FIIs from the Indian market and their waning interest in the Indian growth story.
As the year comes to an end, the Sensex has logged over 4.79% gains and the Nifty has risen nearly 2.02% since the beginning of 2018. The gains are mediocre when compared to 2017.
A key factor deciding the Sensex, Nifty gains this year was the FII flows recorded for the Indian capital market.
Here's a look at factors why FIIs made a sudden exit out of Indian markets this year.
The Modi government imposed long-term capital gains tax on equities with effect from April 1 in Budget 2018-19 this year. The imposition of LTCG dealt a big blow to the funding plans of FIIs into the Indian market. Continuing their winining streak from 2017, FIIs infused Rs 22,272 crore in January this year. The amount was the highest monthly infusion by foreign investors into the Indian market this calender year.
On February 1, the government announced the imposition of LTCG tax on equities which hit investor sentiment. FIIs withdrew Rs 11,674 crore from the Indian market in February. In March, investors poured Rs 2662 crore into the market but that was a shortlived respite for the indain bourses.
The LTCG tax which came into effect from April 1, 2018 led the foreign investors running for cover for three months.
Till June, foreign investors withdrew a huge Rs 61,132 crore (April 15,561 cr, May 29,776 cr, and June 15,795 cr) from the Indian market hurt by the impact of LTCG tax on their investments.
Edited by Aseem Thapliyal
The year 2018 will probably be remembered as the darkest for the foreign institutional investors (FIIs) in terms of ouflows from the Indian capital markets. The year which saw heightened volatility in the Indian market weakened the rationale for foreign investors to infuse their funds into Indian bourses.
Foreign investors were extremely bullish on the Indian market in 2017 and infused over Rs 2 lakh crore, the highest into Indian equity and debt markets during any calender year.
In 2017, Sensex gained 29.58% while the NSE Nifty rose 30.28%.
This year, foreign investors pulled out a record Rs 81,912 crore from the equity and debt segments of the Indian market.
The amount denotes the highest ever outflows by FIIs from the Indian market and their waning interest in the Indian growth story.
As the year comes to an end, the Sensex has logged over 4.79% gains and the Nifty has risen nearly 2.02% since the beginning of 2018. The gains are mediocre when compared to 2017.
A key factor deciding the Sensex, Nifty gains this year was the FII flows recorded for the Indian capital market.
Here's a look at factors why FIIs made a sudden exit out of Indian markets this year.
The Modi government imposed long-term capital gains tax on equities with effect from April 1 in Budget 2018-19 this year. The imposition of LTCG dealt a big blow to the funding plans of FIIs into the Indian market. Continuing their winining streak from 2017, FIIs infused Rs 22,272 crore in January this year. The amount was the highest monthly infusion by foreign investors into the Indian market this calender year.
On February 1, the government announced the imposition of LTCG tax on equities which hit investor sentiment. FIIs withdrew Rs 11,674 crore from the Indian market in February. In March, investors poured Rs 2662 crore into the market but that was a shortlived respite for the indain bourses.
The LTCG tax which came into effect from April 1, 2018 led the foreign investors running for cover for three months.
Till June, foreign investors withdrew a huge Rs 61,132 crore (April 15,561 cr, May 29,776 cr, and June 15,795 cr) from the Indian market hurt by the impact of LTCG tax on their investments.
Edited by Aseem Thapliyal