FPIs Pull Out ₹8000 From Indian Markets In A Day, Indices Stumble At Dalal Street

The Indian markets which were blooming mid-week in the previous trading week, crashed on the last day of the week, on Friday, 12 April.

Markets Sink In Red

The BSE Sensex which went past the summit mark of 75,000 points twice, in the span of just two days, crashed by 793.25 points or a monumental 1.06 per cent. Similarly, the NSE Nifty ended at 22,519.40, losing 234.40 points or 1.03 per cent.

Even the Nifty Bank could not escape the 'Red Sea' as it dropped by 422.05 points or 0.86 per cent to sediment at 48,564.55.

This is being attributed, by many observers to a mass exodus of FPI or Foreign Portfolio Investments resources from the Indian market. As investors pulled out a mammoth Rs 8000 crore or whopping USD 1 billion in just a single day, on Friday.

Uncertainties Mounts On Investors

According to reports, apart from major global uncertainties, that often tend to placate markets in America, relaying a ripple effect on markets across the seas in east as well, a specific policy may have induced the current slump.

This as India and the island nation of Mauritius agreed upon on a protocol to amend a double taxation avoidance agreement (DTAA). This meant that tax relief cannot for the indirect benefit of residents of another country.

And most investors are residents of any country but the two that are a part of the agreement. This adds to the series of changes, that have come into being, affecting Mauritius which was once regarded a 'Safe Haven'.

This comes barely a week after another report emerged, as according to which, FPIs pulled out another Rs 325 crore, again in just the first few days of April. This is crucial, as Mauritius is currently the fourth biggest source of FDI inflow for India. This list is topped by the United States, which accounts for over 17 per cent of the foreign direct investments in India.

It remains to be seen as to how the markets respond and trade in the upcoming trading week, and whether it incurs any further losses.

There are other factors, that could also lead to volatility in the equity market. This includes the increasing uncertainty in the West Asia, thanks to the escalating nature of the conflict between Israel and Iran, which could have an impact on the crude oil prices, once again, initiating a domino-effect on to the global supply chain and global economy at large.