Stock Market

Foreign investors trim holdings as rupee depreciates

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Stocks with relatively high overseas investor holdings have seen a sell-off in September as foreigners shun emerging market equities like India.

Since September 1, shares of 75 companies, in which foreign institutions have poured money, have declined between 10 per cent and 25 per cent on an average. Brokers said foreign investors could be trimming their holdings in them, while domestic investors too are rushing to the exit to pre-empt a large-scale selling.

FIIs have sold equities worth Rupees 3,500 crore in the last five trading sessions. According to an ET study, stocks with more than 20 per cent FPI holding like Adani Transmission, Compton Greaves Consumer, Cholamandalam Investments, V-Mart Retail, Mannapuram Finance and MM Financial Services have dropped between 13 per cent and 19 per cent since the beginning of September. “Foreign investors are likely to witness continued pressure from rupee depreciation,” said Bharat Iyer, India equity strategist, JP Morgan.

“Broad market valuations are back at 10-year highs witnessed in the beginning of the year, despite the 10 per cent long-term capital gains tax imposed on equities.

Valuations are expected to normalise to factor in higher cost of capital”.




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