Goldman Sachs recommended India to reduce its stock holdings after the country's worsening foreign investor exit in July. This was after central bank efforts to support boosting the rupee following the worsened economic slump in the country.
Foreign investors sold USD2 billion of net domestic debt from last month to July 30. This extended the record of withdrawal in June by USD5.4 billion. The two-month outflows reached USD2.8 billion, which is the highest after the November 2008 financial crisis. This was according to the regulatory and exchange data compiled by Bloomberg. In a report dated July 31, Goldman reduced its ratings on India's shares.
Last month, the Indian rupee decreased by 1.6% and reached its lowest last July 8. The slump was after the US Federal Reserve announced stimulus reduction that would make it more difficult for India to the deficit on its current account. The country's central bank has increased two of its policy rates last July 15. This prompted the increase on interbank borrowing costs that would hurt the economy, said Credit Agricole CIB in a report yesterday.
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