FII pullback to hurt growth, fiscal targets
Delhi: With foreign institutional investors (FIIs) selling equities worth over Rs 8,688 crore in the last 16 trading sessions, the country is seeing the sharpest reversal in foreign capital inflows since the Lehman Brothers collapse 20 months back. Benchmark indices that advanced the most in more than two weeks on Monday, on the news of a possible patch-up between the Ambani brothers, failed to gain traction and closed flat on lack of FII support.
While macro-policy managers have put up a brave face, many analysts have begun to take note. It is feared that the 8.75% growth projection and a return to the fiscal consolidation path could remain elusive if the trend continues.
Analysts are sceptical of India retaining its status as an investment destination despite the euro zone crisis, the full effect of which is yet to be known. “Our view is that if the European crisis deepens, and global markets suffer another leg down, it will get increasingly difficult for India to remain unaffected,” says Ridham Desai, head of research at global financial services firm Morgan Stanley.
In the quarter ended March 2010, FIIs held 14.5% in the BSE 500 stocks, making them the single largest investor class to decide the fate of the markets.
Delhi: With foreign institutional investors (FIIs) selling equities worth over Rs 8,688 crore in the last 16 trading sessions, the country is seeing the sharpest reversal in foreign capital inflows since the Lehman Brothers collapse 20 months back. Benchmark indices that advanced the most in more than two weeks on Monday, on the news of a possible patch-up between the Ambani brothers, failed to gain traction and closed flat on lack of FII support.
While macro-policy managers have put up a brave face, many analysts have begun to take note. It is feared that the 8.75% growth projection and a return to the fiscal consolidation path could remain elusive if the trend continues.
Analysts are sceptical of India retaining its status as an investment destination despite the euro zone crisis, the full effect of which is yet to be known. “Our view is that if the European crisis deepens, and global markets suffer another leg down, it will get increasingly difficult for India to remain unaffected,” says Ridham Desai, head of research at global financial services firm Morgan Stanley.
In the quarter ended March 2010, FIIs held 14.5% in the BSE 500 stocks, making them the single largest investor class to decide the fate of the markets.