Foreign investors pull out close to $5 billion so far in November on demonetisation drive

[The_Showstopper]

Foreign investors pull out close to $5 billion so far in November on demonetisation drive

NEW DELHI: Foreign investors have pulled out close to $5 billion from the capital markets in November so far amid concerns over the impact of demonetisation coupled with fears of rate hike by the US Federal Reserve.

Net withdrawal by FPIs from equities stood at Rs 15,763 crore during November 1-25, while the same from the debt market was Rs 16,154 crore during the period under review, translating into total outflow of Rs 31,917 crore ($4.7 billion), according to exchange data.

Foreign portfolio investor (FPI) outflows come following withdrawal of more than Rs 10,306 crore on net basis from the capital markets (equity and debt) last month. Prior to that, the equity market had witnessed inflows of over Rs 20,000 crore.

This year so far, FPIs have invested a net sum of Rs 37,146 crore in stocks while they pulled out Rs 13,278 crore from the debt market, resulting in combined net inflow of Rs 23,868 crore.

Domestic cash crunch following demonetisation drive to curb black money sparked intense selling pressure.

The pull out by FPIs started in October 2016, on uncertainty over US election results and was felt across emerging markets.

"This was further exasperated in November due to several factors -the uncertainty over US ties with the emerging markets, post Trump victory, the near term impact on corporate earnings, and economic growth from demonetisation in the near term and impact of GST on companies' near term cash flows," said Vidya Bala, Head, Mutual Fund Research, Fundsindia.com.

"In the debt market, FPIs have been net sellers in seven out of 11 months thus far. The rally in the Indian government securities and the decreasing spread between US interest rates and India could be a reason; FPIs book profits in the gilt rally in India," she added.

Recently, US Federal Reserve chief Janet Yellen reiterated that the central bank may hike interest rates "relatively soon", which made investors more anxious.

http://economictimes.indiatimes.com...ation-drive/articleshow/55648776.cms?from=mdr

 

[ito]

Cash crunch is easing slowly but steadily. The situation is far better than it was in the first week.

 

[911]

If opposition and obvious certain section don't create hoopla in everything then things can actually work better in India. This blind opposition in last 2.5 years has hurt India more than anything. This cycle of creating chaos all over, negative perception and wishing bad things to happen in the country has been going on since years and is the reason our country is in this state and probably be like this if some radical changes are not done in political system.

 

[Rajaraja Chola]

To be honest all the protests have failed. Interest rates are going to get even lesser. And I hope Banks start giving more loans to new entrepreneurs .

 

[IndoCarib]

Notes Ban Big Step For Financial Inclusion, Says Nandan Nilekani: Highlights

http://www.ndtv.com/india-news/note...usion-says-nandan-nilekani-highlights-1631265

Nilekani is neither a bhakt nor a Sanghi

 

[Great Sachin]

It will come back in 1-2 months.....think how much more will come..Jan 2017 onwards

 

[The_Showstopper]

Modi's demonetisation stunner to cost Rs 1.28 lakh cr: CMIE

The Centre for Monitoring Indian Economy (CMIE) has estimated Rs 1.28 lakh crore as the cost to the economy during the 50-day period till December 30 by when people may deposit old Rs 500 and 1,000 currency notes with banks.

This does not include many indirect costs, such as those from disturbing the supply chain, says the study by its managing director, Mahesh Vyas.

These 50 days are a little more than half of the third quarter of the current financial year. Gross Domestic Product (GDP) was Rs 34.8 lakh crore in the same quarter of 2015-16. Nominal GDP grew by Rs 2.9 lakh crore during that period, year-on-year.

The highest immediate cost, at Rs 61,500 crore, would be borne by the enterprise sector, says the paper. This covers all businesses that produce goods and services and are involved in the entire supply chain of these -- farmers, input suppliers, transporters, retailers, manufacturers, stockists, distributors, malls and other retail outlets.

In comparison, CMIE says the combined sales of 69 fast moving consumer goods companies was Rs 2.7 lakh crore in 2015-16.

The study says the entire supply chain of goods and services will suffer a massive liquidityshock. A large part of this chain is cash-based.

"This cash-based economy is unable to continue transactions because of the sudden fall in availability of cash. It is unable to meet business and financial obligations, and unable to liquidate stocks and receivables into cash. In fact, it is very busy dealing in converting the old currency it used to conduct business hitherto," says the study.

The impact of a broken supply chain would play out over several quarters. It would impact capacity utilisation of manufacturing companies and jobs. Over the medium to long term, investments as well, it says.

The immediate impact would be a fall in sales because of a fall in liquidity, with households cutting discretionary consumption spending during the 50-day period.

It estimates this fall by using the household consumption expenditure data already available with CMIE. The study also estimates, at Rs 15,000 crore, the cost to people standing in a queue to change old currency notes with new ones or to deposit old currency notes into banks or to get new currency notes for use.

"If people were not to stand in queues, they would be doing some productive work that would help them earn some wages. Since they are forced to stand in queues, they effectively lose wages for the period. This loss is the predominant cost of people standing in queues to exchange old currency notes into new ones," it says.

This includes the expenditure on photocopying of identity proofs required for the transactions, though not for incidental cost such as travel.

The financial cost cannot take into account the loss in production because these people were in the queues or the pain, irritation and anxieties the individuals suffer. Or the cost to the environment by making photocopies on an estimated 25 million sheets of paper.

It pegs the cost to banks at Rs 35,140 crore. "People queueing outside banks to convert their old 500 and 1,000 rupee currency notes into bank savings or into new currency notes are serviced by bank managers, officials and other staff. The pressure of this conversion is so high that the bank can do very little else. To calculate the cost of their work in converting old currency notes, we assume that they spend 95 per cent of their time on this work," it says.

Finally, it projects cost to the government and the Reserve Bank to be Rs 16,800 crore. There are at least four kinds of costs in this regard. First, they have to print new currency notes. Second, the cost of transporting the new notes to all bank branches, post offices and ATMs. Third, pay the highway toll agencies, which have been asked to keep their stretches toll-free. Fourth, own costs in terms of human resources and corresponding overheads to manage this mammoth operation, it says.

Source: http://www.business-standard.com/ar...cost-rs-1-28-lakh-cr-cmie-116112400827_1.html

 

[Kashmiri Pandit]

I think more money will be recovered by taxing Black money this way compared to losses caused by this method .

 

[911]

This does not include many indirect costs, such as those from disturbing the supply chain, says the study by its managing director, Mahesh Vyas.

This also does not include that the new notes are already available, not after 50 days, and that their circulation is increasing linearly. Moreover transactions through lower denomination is not effected that much, and tranactions in big amounts can always be done through banks .

 

[The_Showstopper]

Moreover transactions through lower denomination is not effected that much, and tranactions in big amounts can always be done through banks .

Are you still living in a wonderland? Are you telling me transactions through lower denomination is not affected. Daily wagers have gone jobless. Small traders are losing out on business. All of this has been posted previously on PDF albeit on a different thread, so please wake up and smell the coffee

 

[911]

Are you still living in a wonderland? Are you telling me transactions through lower denomination is not affected. Daily wagers have gone jobless. Small traders are losing out on business. All of this has been posted previously on PDF albeit on a different thread, so please wake up and smell the coffee

You need to go out and smell the coffee yourself. If this suffering was a widespread phenomenon then there would have been huge public outrage, not this biased report. This report has matched the data of pervious year and blamed it all on demonetisation. Report has also assumed that every person is wasting his time in queues everyday since the announcement, there are many more flaws.

 

[Soumitra]

Are you still living in a wonderland? Are you telling me transactions through lower denomination is not affected. Daily wagers have gone jobless. Small traders are losing out on business. All of this has been posted previously on PDF albeit on a different thread, so please wake up and smell the coffee

You wake up and smell the coffee.Leave aside us "Bhakts" just see the results of various elections - Bye Elections and Local Body Elections where BJP has performed so well. Did you see the cold response given to the "Bharat Bandh" ? Do you see any riots on the streets due to Demonetisation? Do you see the decrease in insurgency and maoist activities? I am in Bangalore and the long lines in ATMs and Banks have all but disappeared.

the fact of the matter is that the common man has welcomed this move. Yes there has been some inconvenience but the opposition and the leftist liberals are exaggerating it like anything maybe hoping there will be some sort of a revolt but nothing is happening

 

[The_Showstopper]

You wake up and smell the coffee.Leave aside us "Bhakts" just see the results of various elections - Bye Elections and Local Body Elections where BJP has performed so well. Did you see the cold response given to the "Bharat Bandh" ? Do you see any riots on the streets due to Demonetisation? Do you see the decrease in insurgency and maoist activities? I am in Bangalore and the long lines in ATMs and Banks have all but disappeared.

the fact of the matter is that the common man has welcomed this move. Yes there has been some inconvenience but the opposition and the leftist liberals are exaggerating it like anything maybe hoping there will be some sort of a revolt but nothing is happening

LOL Now you want to find some solace in Election results, that too, local body elections. Where have the terror attacks gone? Just got to hear one right now. Many videos/sources have been posted in one of the thread on PDF on the number of deaths caused due to the SOME INCONVENIENCE.

But I am sure you haven't seen any long queues at all during the whole process.

So carry on... I can't expect any better from you

You need to go out and smell the coffee yourself. If this suffering was a widespread phenomenon then there would have been huge public outrage, not this biased report. This report has matched the data of pervious year and blamed it all on demonetisation. Report has also assumed that every person is wasting his time in queues everyday since the announcement, there are many more flaws.

Are you telling me there is no public outrage

Do you want me to post some videos(Some of them might even give you heart attack)

From when did reports become assumptions. There is a reason why they are called reports

@Soumitra @911 In case you missed... please refer the following

https://defence.pk/threads/33-demon...cides-heart-attacks-and-even-a-murder.461480/

I rest my case here, can't go on discussing on forgone conclusion..