Foreign Investors Withdraw Funds Amidst Market Changes
On Thursday, foreign institutional investors (FIIs) pulled out USD 770.67 million from India. This included USD 440.86 million from equities, USD 327.44 million from debts, and USD 2.31 million from hybrid categories. Despite these outflows, the total FII inflows for 2024 stand at USD 18.241 billion, with USD 8.924 billion for fiscal year 2025, as per an SBI report.
Economic Growth and Mutual Funds
The domestic economy is thriving, with the supply chain sector showing strong growth. E-way bill generation, a key economic activity indicator, hit a record 117.25 million in October, marking a 17% year-on-year increase. Mutual funds in India have also grown, with their share in NSE-listed companies reaching 9.45% by September 30, 2024, up from 9.18% in June, driven by a net inflow of Rs89,038 crore.
Vegetable Oil Imports and Market Sentiment
India’s vegetable oil imports are expected to decrease to 15 million metric tons in 2024-25 due to favorable weather boosting domestic production. Palm oil imports may drop to 9.2 million metric tons, while sunflower oil imports could rise to 3.5 million metric tons. Market sentiment was influenced by foreign outflows and the US election results, with Donald Trump re-elected, strengthening the dollar and weakening emerging market currencies.
Impact on Indian Stock Market and Rupee
The Indian stock market suffered on Thursday, with Sensex and Nifty 50 falling over 1%, erasing previous gains. The rupee hit an all-time low of Rs84.38 during the session, closing at Rs84.37, down 0.1% from Wednesday’s Rs84.28, affected by equity outflows and expectations of a stronger dollar post-Trump’s victory.
Doubts Revealed
Foreign Institutional Investors -: Foreign Institutional Investors (FIIs) are people or companies from other countries who invest money in India’s stock market. They buy shares of Indian companies to earn profits.
USD 770.67 million -: USD 770.67 million is a large amount of money, about 770 million US dollars, that foreign investors took out from India. This can affect the Indian economy and stock market.
E-way bill -: An e-way bill is an electronic document required for the movement of goods in India. It helps track goods and ensures taxes are paid correctly.
Mutual fund shares -: Mutual fund shares are parts of a big pool of money collected from many people to invest in stocks, bonds, or other assets. People buy these shares to grow their money over time.
Vegetable oil imports -: Vegetable oil imports refer to the buying of oils like palm oil or soybean oil from other countries. India imports these oils for cooking and other uses.
Market sentiment -: Market sentiment is the overall feeling or mood of investors about the stock market. It can be positive or negative, affecting how people buy or sell stocks.
Sensex and Nifty 50 -: Sensex and Nifty 50 are two important stock market indexes in India. They show how well the top companies in the stock market are doing.
Rupee hit a record low -: When the rupee hits a record low, it means the value of India’s currency is very low compared to other currencies like the US dollar. This can make buying things from other countries more expensive.