Foreign investors pull out Rs 44,500 crore from Indian market in 2018-19

Despite heavy fund infusion by FPIs over the past two month, the domestic financial market suffered a foreign fund outflow of over Rs 44,500 crore on net basis in the fiscal 2018-19 as macroeconomic headwinds weighed on investor sentiment through the year.
Hike in rates by the US Federal Reserve, depreciating rupee, rise in crude oil prices, worsening current account deficit, concerns over fiscal deficit and current account deficit target, coupled with trade tiff between the US and China dampened the mood in emerging markets, experts said.

In financial year 2018-19, foreign portfolio investors (FPIs) pulled out a net sum of Rs 1,629 crore from equities and Rs 42,951 crore from the bonds market, taking the total net outflow to Rs 44,580 crore, the depositories data showed.
In comparison, FPIs had infused a net amount of Rs 25,634 crore in the equities and over Rs 1,19,035 crore in the debt market, a total net investment of Rs 1,44,669 crore in the previous fiscal.
"After two years of good foreign fund inflows, Indian market witnessed reversal in the trend. We received Rs 48,411 crore and Rs 1,44,682 crore in the year 2016-17 and 2017-18, respectively. Global and domestic causes alike have prompted the flows of funds in 2018-19 from the markets and both the equity and debt segments have witnessed outflows", Alok Agarwala, Senior VP and Head Investment Analytics, of Bajaj Capital said.
FPIs remained net sellers almost throughout the recently concluded fiscal except for the past couple of months. October emerged as the month of steepest outflow with FPIs pulling out a massive Rs 38,900 crore from the market.
However, fresh fund infusion was witnessed in the last two consecutive months of the fiscal, with March alone accounting for a net infusion of Rs 45,981 crore including a net Rs 33,980 crore in equities and Rs 12,001 crore in debt.
In February, the overseas players pumped in a net amount of Rs 11,182 crore in capital markets.
This inflow "could be attributed to the shift in stance on monetary policy outlook by various central banks globally, which led to the improvement in global liquidity condition. In January 2019, the US Fed announced a pause in rate hike, followed by China and European Central Bank providing stimulus to their respective economies," said Himanshu Srivastava, Senior Analyst Manager Research, at Morningstar.
This, along with expectation of a positive outcome from the US-China trade agreement bolstered the risk-on sentiments among foreign investors who diverted huge investments towards emerging markets, Srivastava pointed out adding "it is difficult to say anything conclusive about continuity of foreign funds at this stage".

US judge rules Obamacare unconstitutional due to change in federal tax law

A US federal judge has ruled the Affordable Care Act (ACA) or Obamacare as unconstitutional due to a recent change in federal tax law.
The ruling on Friday night by US District Judge Reed O'Connor of Texas overturns all of the 2010 healthcare law nationwide, reports The Washington Post.

In his opinion, Judge O'Connor said: "(The) individual mandate can no longer be fairly read as an exercise of Congress's Tax Power and is still impermissible under the Interstate Commerce Clause-meaning the Individual Mandate is unconstitutional."
He also held that the individual mandate is "essential to and inseverable from the remainder of the ACA".
The ruling came on the eve of the deadline for Americans to sign up for coverage in the federal insurance exchange created under the law.
A spokeswoman for California Attorney General Xavier Becerra, who leads a group of states opposing the lawsuit, said on Saturday that the Democratic defenders of the law were ready to challenge the ruling in the US Court of Appeals for the 5th Circuit, New Orleans.
Legal experts have said that the law will remain in effect for now, but the invalidation of the landmarklegislation throws into doubt the future of health coverage for millions of Americans on the Obamacare exchanges and in Medicaid expansion, CNN said.
More than 4 million people have already signed up for 2019 coverage on the exchanges and millions were expected to pick plans before open enrollment ends on Saturday.
The case against the ACA was brought by 20 Republican state attorneys general and governors, as well as two individuals.
It revolves around Congress effectively eliminating the individual mandate penalty by reducing it to $0 as part of the 2017 tax cut bill.
The Republican coalition is arguing that the change rendered the mandate itself unconstitutional.
They say that the voiding of the penalty, which takes effect next year, removes the legal underpinning the Supreme Court relied upon when it upheld the law in 2012 under Congress' tax power.
The mandate requires nearly all Americans to get health insurance or pay a penalty.
President Donald Trump, who has always opposed the ACA, immediately celebrated the ruling via Twitter, saying Congress must now act, reports CNN.
"As I predicted all along, Obamacare has been struck down as an UNCONSTITUTIONAL disaster! Now Congress must pass a STRONG law that provides GREAT healthcare and protects pre-existing conditions. Mitch and Nancy, get it done!" Trump wrote.
"Wow, but not surprisingly, ObamaCare was just ruled UNCONSTITUTIONAL by a highly respected judge in Texas. Great news for America!"