FII outflows an area of concern: Pranab

**New Delhi:**Expressing concern over the rapidpullout of FII money, Finance Minister Pranab Mukherjee todaysaid outflows driven mainly by the euro zone crisis areimpacting the stock market.

“The current volatility in the stock market andwithdrawal of FIIs have a direct correlation with the eurozone crisis, so it will have some impact, particularly on FIIflows,” Mukherjee said while addressing the Hindustan Times

Leadership Summit.

[caption id=“attachment_146495” align=“alignleft” width=“380” caption=“Foreign funds withdrew over Rs 3,200 crore from theIndian securities market in the month of November.Reuters”]  [/caption]

The minister, however, took some comfort from theincrease in foreign direct investment (FDI) so far this year.“Up to now, the indication is that FDI inflow is muchbetter compared to last year, but FII outflow is an area ofconcern,” Mukherjee said.

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Foreign funds withdrew over Rs 3,200 crore from theIndian securities market in the month of November amidconcerns over the worsening debt crisis in the euro zone. Stock markets have witnessed sharp volatility in recenttimes, mainly on account of the withdrawal of funds by foreigninstitutional investors (FII) and depreciation of the rupee.

The BSE benchmark Sensex index has lost over 19 percentso far this year and is down by nearly 22 percent from anall-time high of 21,206.77 points scaled on 10 January 2008.

With respect to foreign direct investment inflows, duringthe April-September period, FDI went up by about 74 percentto $9.13 billion from $11 billion in the year-agoperiod as inflows were robust in the initial months of thefiscal.

He said there is a renewed purpose among nations incoming together to address global issues. The euro zone ispresently grappling with a sovereign debt crisis, which couldhave implications for the growth prospects of both developingand developed economies.

Mukherjee said, “If India can continue to grow andacquire economic stake, we would be a source of stability forthe world economy that provides safe havens for restlessglobal capital. That would also enable us to grow faster.”

PTI