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FIIs pull out Rs 3,000 cr in 3 days post Pulwama attack but DIIs maintain support
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IANS | 25 Feb, 2019
The Pulwama attack on February 14 continues to have multiple
repercussions across political, economic and social dimensions. The
latest one being the massive outflow of foreign funds following the
same.
Foreign Institutional Investors (FIIs) -- which profoundly
influence investor sentiments at the bourses given its substantial sum
-- pulled out over Rs 3,000 crore in just three days after the attack.
But
in the comparable period, the Domestic Institutional Investors (DIIs)
maintained their support pumping Rs 4,353.84 crore into the market.
"Tensions
between India and Pakistan always makes the market volatile. FIIs are
net sellers post this development because they wanted to protect their
portfolio," said Debabrata Bhattacharjee, Head of Research, CapitalAim.
DIIs are awaited and looking at this as an opportunity to invest in a quality stock with fair valuation, he added.
Though
the size of India and Pakistan trade is limited, markets tend to get
affected more by investor sentiment than actual numbers. Since the
attack, India has taken a tough stance and outright combat may still be
on the cards.
Analysts have said that traders are closely looking
at India's stance in response to the attack, which has been nothing
less than aggressive. Since the attack, India has revoked the Most
Favoured Nation (MFN) status given to Pakistan and imposed a 200 per
cent import duty on its goods.
"While political relations between
the two countries have most certainly influenced trade, it is important
to note that no measures having a direct negative impact on trade were
adopted by the two countries unlike instances in the past when political
skirmishes led to adopting measures which restricted trade," a working
paper by ICRIER said last year.
The reversal of trend was visible
as FIIs got a major boost earlier in February. Along with the overall
equity market, the FIIs reacted positively to the Interim Budget and the
rate cut by the Reserve Bank of India.
However, Deepak Jasani of
HDFC Securities anticipates a stable foreign inflow in the upcoming
trade sessions. A strong reason for this, Jasani added was the
"favourable interest rate scenario".
Besides, Bhattacharjee said
that if FIIs are on selling mode then market will correct from current
levels because they have a strong presence in Indian Equity Market.
A
notable exception came on Friday, with the Rs 6,122.41 crore inflow,
the highest this month but experts said it would not mean a reversal in
trend as it came amid the Kotak Bulk Deal.
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Customs Exchange Rates |
Currency |
Import |
Export |
US Dollar
|
66.20
|
64.50 |
UK Pound
|
87.50
|
84.65 |
Euro
|
78.25
|
75.65 |
Japanese
Yen |
58.85 |
56.85 |
As on 13 Aug, 2022 |
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