Foreign investors weary of India bank rate cuts |
Foreign portfolio investors in India have offloaded equities worth around Rs 3,000 crore in the first week of October amid fears of global recession and trade war. This follows a net investment of around Rs 7,850 crore by foreign portfolio investors (FPI) into equities in September. Market experts believe that FPI inflows should have picked up after the rate cut by the Reserve Bank of India but the negative sentiments in the Indian capital market did not send good vibes for the investors. The central bank on Friday cut benchmark repo rate by 25 basis points to 5.15 per cent. The interest rates cut is for a record fifth straight time to almost a decade low. According to the depositories data, overseas investors pulled out Rs 2,947 crore from equities and Rs 977 crore from debt segment on a net basis. This resulted in a total net outflow of Rs 3,924 crore from the Indian capital markets during October 1-4. In the last week of September, the government slashed corporate tax rate by around 10 percentage points and also clarified that the enhanced tax surcharge will not apply on capital gains arising from the sale of any security, including derivatives, in the hands of FPIs. Market regulator, Securities Exchange Board of India has also simplified know-your-customer requirements for FPIs and granted them permission to carry out off-market transfer of securities.
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