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FIIs pull out Rs777 crore in April

This was the first instance of monthly net outflows by FIIs since November 2011

New Delhi: After pouring hefty funds into the Indian equity market in the first three months of the year, overseas investors turned bearish in April and pulled out Rs777 crore amid S&P lowering India’s credit outlook to negative from stable, reports PTI.

This was also the first instance of monthly net outflows by foreign institutional investors (FIIs) since November 2011.

In the current month so far, FIIs made gross purchase of equities worth Rs39,008 crore and sold shares valued Rs39,785 crore translating into a net outflow of Rs777 crore, according to data available with the market regulator SEBI.

Market experts attributed the outflow to a host of factors including government’s anti-tax avoidance rule (GAAR) proposal announced in the Budget that has been the real dampener for several FIIs whose clients had used participatory-notes to invest in the Indian stock market.

The sentiment was further soured by ratings agency S&P’s move to lower India’s outlook to negative from stable, citing slow progress on its fiscal situation and deteriorating economic situation, experts added.

In fact after S&P’s move, FIIs have withdrawn nearly Rs1,300 crore from the stock market in the last three trading sessions.

In the first three months of 2012, FII had invested a record Rs43,951 crore. Of this, Rs10,358 crore was poured in January, Rs25,212.10 in February and the rest Rs8,381 crore in March.

The strong FII inflows in January-March period was attributed by marketmen to the Reserve Bank of India’s (RBI) pause in rate hikes and the improving liquidity position.

During April, foreign fund houses pulled out Rs777 crore from the stock market and Rs2,111 crore from the debt market, taking the collective net outflow by FIIs in stocks and bonds to Rs2,888 crore.

FIIs, the main drivers of the markets that gained nearly 13% in the first three months of 2012, have turned negative on equity so far this month.

After taking the latest withdrawals into account, FIIs still left with an investment of Rs43,173 crore into the equity market so far this year and Rs17,287 crore into the debt market during the same period.

For the calendar year 2011, FII pulled out over Rs2,700 crore from the equity market.



Ravi Gupta

4 years ago

Are FIIs the determinants of the Indian stock market? Is Rs.777cr so significant keeping in view the total capitalisation and total FII investment ?

FII business seems to be overdone. Indian media should create less hype about it. FIIs are withdrawing globally and not just India. You may research it out on net before writing such articles.

SEBI to announce new consent settlement norms

The Securities and Exchange Board of India has decided to revise the existing consent procedure, after it found lack of uniformity and necessary details in the prevailing system, which is in place since 2007, a senior official said

New Delhi: Market regulator Securities and Exchange Board of India (SEBI) is set to put in place a new and detailed mechanism for its ‘consent’ procedure—an out-of-court-like settlement through which it settles cases of suspected irregularities by listed companies and various market entities, reports PTI.

SEBI has decided to revise the existing consent procedure, after it found lack of uniformity and necessary details in the prevailing system, which is in place since 2007, a senior official said.

The new consent mechanism, which could be announced soon by the regulator, has been finalised after months of deliberations that began around middle of 2011 and involved consultations within SEBI and with the government officials and outside experts, he added.

In the consent process, the entity facing a probe by SEBI is subjected to certain fees and restrictions without admission or denial of alleged irregularities and the regulator thereafter drops its charges and the investigations.

As per the existing consent norms, SEBI can impose a penalty higher between Rs25 crore and an amount equivalent to three times the profit allegedly made by the suspected entity through insider trading or other manipulative activity.

SEBI decided to revise the process after an internal study found that different yardsticks might have been applied in different consent cases and there was no consistency or any clear-cut uniformity in the way such cases were being handled.

Besides, it also came across cases being settled with entities from same group on more than one occasion, although a consent order is broadly considered as a warning to the related party for not repeating similar offences.

Another point of contention was certain discretionary powers given to SEBI officials settling the probe.

The revised norms would also aim to remove the perceptions about consent orders being mostly subjective, not being adequately transparent in nature, and providing an escape route to the alleged offenders.

Sources said future consent orders could be framed in such a way so that they can be taken as a warning from the regulator and could work as a 'name and shame' directive for those alleged to have erred in market dealings.

Besides, the new norms would bring in more clarity on how such orders should be framed, as also at what time and in which cases consent orders should be passed.

SEBI introduced consent settlement system in April 2007 with a view to cut down on its costs, time and efforts in taking up the enforcement actions. So far, the regulator has passed more than 1,000 consent orders.


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