FPIs have withdrawn a net of Rs 4,600 crore from equities, while they pulled out Rs 1,262 crore from the debt markets during September 1-18, according to depositories data for this month. (Reuters)

Foreign investors have pulled out nearly Rs 6,000 crore from capital markets in this month so far on account of various global and domestic factors.

The equity market has seen steeper outflows compared to debt markets.

Outflows are unlikely to continue as the US Federal Reserve maintained status quo on interest rate, which may give the Reserve Bank of India some headroom to lower its key lending rate, according to some analysts.

The latest pull-out follows a record net outflow of Rs 17,428 crore from equities last month. That was the highest net outflow by foreign portfolio investors (FPIs) in a single month since 1997.

The segregated data prior to 1997 was not available.

FPIs have withdrawn a net of Rs 4,600 crore from equities, while they pulled out Rs 1,262 crore from the debt markets during September 1-18, according to depositories data for this month.

Market experts attributed huge outflows to sustained global risk-off trend along with concerns over economic slowdown in China and currency devaluation by the world’s most populated country.

Besides, China’s weak PMI and lower GDP growth dampened sentiment in India.

Since the beginning of the year, FPIs have made a net investment of Rs 22,922 crore in equities and Rs 37,442 crore in debt markets.

Last week, sentiment was hit by sharp fall in European stocks. On a weekly basis, the benchmark BSE Sensex lost 355.41 points or 1.35 per cent to 25,863.50. (AP)

All eyes are now on the Reserve Bank’s monetary policy review on September 29 as the stance taken by its chief Raghuram Rajan will determine the broader trajectory of the market.

Besides, auto firms will be in focus amid announcement of monthly sales data for September from Thursday.

“This time majority of participants are hoping for 25 basis points cut in key lending rate,” said Jayant Manglik President of Retail Distribution at Religare Securities.

Rate cut hopes are fuelled by retail inflation dropping to 3.66 per cent in August as well as economy expanding at a slower pace of 7 per cent during the same month.

“Outcome of RBI’s monetary policy review, macroeconomic data, trend in global markets, investment by foreign investors, movement of rupee against the dollar and crude oil price will dictate trend of the market,” said Vivek Gupta, CMT Director Research of CapitalVia Global Research.

Last week, sentiment was hit by sharp fall in European stocks. On a weekly basis, the benchmark BSE Sensex lost 355.41 points or 1.35 per cent to 25,863.50.

For the week ahead, investors will also be eyeing Nikkei India Manufacturing PMI scheduled to be released on Thursday.

But according to Hitesh Agrawal, Head Research at Reliance Securities it will be monetary policy review on Tuesday that will dictate market sentiment.

“… in wake of the US Fed’s status quo on its interest rate and supportive domestic inflation data, expectations of a rate cut by the RBI this time around are high,” he added.

Agrawal also lists global stock market trend that will influence domestic indices.

Meanwhile, equity markets will remain closed on Friday on account of Gandhi Jayanti.

After the crash of August 24, 2015, when the Sensex plunged by a record 5.94 per cent, or 1,625 points, people started to draw a comparison with the Global Financial crisis of 2008 that shook the stock markets worldwide. (Photo: Reuters)

After the crash of August 24, 2015, when the Sensex plunged by a record 5.94 per cent, or 1,625 points, people started to draw a comparison with the Global Financial crisis of 2008 that shook the stock markets worldwide.

It was the month of January in 2008 when domestic benchmark indices were at their peaks. However, concerns over slowdown in the United States impacted global equity markets, pushing them down steeply from their highs. As a result, the BSE Sensex fell from 20,873.33 on January 8, 2008 to 8,160.40 on March 9, 2009. This was a fall of 61 per cent in nearly 15 months.

In the current calendar year(2015), the benchmark indices once again hit their new closing highs in January on hopes that Narendra Modi government will revive the macro economic environment. However, delay in key reforms like the Goods and Services Tax and Land Acquisition bills coupled with China slowdown dented market mood this year. As a result, Sensex declined 13 per cent to 25,822.99 on September 23 from 29,681.77 on January 29 this year.

Nilesh Shetty, associate fund manager, equity, Quantum AMC, said, “Correction of 2008 surprised investors as they were not expecting a fall of over 50 per cent in the domestic markets. Slowdown in US housing market was the main reason for the fall then. The scenario is different this time. This year markets hit new highs on account of change in political leadership. However, things remained the same at ground level. Meanwhile, investors started checking valuations of domestic markets and found it was on higher side as compared to other emerging markets. I believe these factors dampened market sentiments this year.”

Brokerages have downgraded their Sensex targets for this year but still bullish on the further movement. CLSA has lowered its forecast for December 2015 to 30,000 points from 31,800. Ambit Capital too has revised the BSE Sensex target to 28,000 from 32,000. Macquarie and Barclays have downgraded the December target for Nifty to 8,700 and 9,642 from 9,600 and 10,219 earlier. Deutsche Bank also has cut India’s BSE benchmark Sensex target to 28,000 from 31,000 earlier citing concerns over global growth.

Below are few five factors that compare the bears of 2008 and 2015:

Commodity prices: 2008 was an era when commodity prices were all going upwards. Particularly that of crude oil with prices in excess of $100 per barrel. However in 2015, commodity prices are soft. This in turn has and will continue to help India as an economy as we are primarily importers. Soft commodity prices also help corporate earnings through margin expansion. In addition to this, “The global softness in commodity prices also helps improve India’s image for foreign investors as compared to other emerging markets since most emerging markets are commodity exporters and have in turn seen their own growth come under pressure in recent times,” said Nitasha Shankar, vice-president, research, YES Securities.

Inflation: Back in 2008, inflation was a big concern for all markets including India with CPI trending in excess of 8 per cent. Higher levels of inflation eventually led to monetary tightening by the central bank. This time around, inflation has been surprising on the positive which has left room for monetary easing. This in turn is expected to help revive investments and capex in the country and drive economic growth.

China: In 2008, China was considered to be the main growth engine in the global scenario. However in 2015, China has emerged as a major investment concern with signs of a significant slowdown in its economy. This fear was further intensified when the People’s Bank of China devalued the currency, Yuan. This in turn has triggered fears of a currency crisis particularly in the emerging market currencies. While the Indian Rupee did follow suit post devaluation of Yuan. However “The Rupee is relatively in a better position thanks to the war chest of foreign exchange reserves built up by the RBI over the past 1-1.5 years,” said Shankar.

US: In 2008, the US economy slipped into recession, which in turn had a spillover effect in the rest of the world. The consecutive rounds of quantitative easing led to a huge flow of money and liquidity in the global markets which in turn led to a sharp increase in asset prices particularly in the emerging markets. “This time around, US appears to be on a relatively better footing as the economy is seeing green shoots of recovery. This in turn has led to a drawdown of the quantitative easing programs and have also triggered the expectation of monetary tightening in the economy,” said Shankar.

Valuations: On January 8, 2008, Sensex was trading at price-to-earnings (P/E) ratio of 28.51 against five year average P/E ratio 18.23, which indicates the benchmark index was highly over valued that time. However, the scenario is different presently. On January 29, 2015, P/E ratio of Sensex was at 20.13 against five year P/E ratio of 18.70. This time too valuations were on higher side but not that much that were in the bear market 2008.

In 2014, the Sensex rose by 6,328.74 points or 30 per cent, the highest annual gain since 2009 when it had rallied by 7,817 points. (Photo: Reuters)

Stock market investors have become poorer by nearly Rs 3 lakh crore so far this year as the recent selling in equities pulled down the valuation of all listed firms on BSE to Rs 95.40 lakh crore.

Total investor wealth, measured in terms of cumulative market value of all listed stocks, fell by Rs 2.95 lakh crore to Rs 95.40 lakh crore this year.

In 2014, market investors added a whopping Rs 28 lakh crore taking the valuation of all listed firms to Rs 98.36 lakh crore. Last year also saw investor wealth hitting Rs 100 lakh crore mark.

Markets have been volatile for past couple of quarters on weak corporate earnings and negative global cues.

The benchmark BSE Sensex has lost 1,635.92 points or 5.94 per cent to 25,863.50 so far in 2015.

The index hit an all-time high of 30,024.74 on March 4, 2015, however, the later half of the year saw the gauge giving up most of its gains and subsequently touched a one-year low level of 24,833.54 on September 8.

Sensex crashed by 1,624.51 points on August 24 — its biggest ever single-day fall — wiping out over Rs 7 lakh crore from investors’ wealth on a sharp global sell-off triggered by a Chinese rout.

Concerns over economic slowdown in China and currency devaluation have dampened investors sentiment.

In 2014, the Sensex rose by 6,328.74 points or 30 per cent, the highest annual gain since 2009 when it had rallied by 7,817 points.

Foreign investors have pulled out about Rs 5,000 crore from the capital markets since beginning of this month.

Last month, the net outflow from equities was Rs 17,428 crore. That was the highest net outflow by foreign portfolio investors (FPIs) in a single month since 1997.

Since beginning of the year, FPIs have made a net investment of Rs 23,961 crore in equities and Rs 37,654 crore in debt markets.