Let us say, Johnny is a Foreign Investor, who had invested 100 Dollars in our Markets when 1 dollar was equivalent to Rs.45.
Which means he can buy shares worth Rs.4500.
Now let us say, the stock prices remained the same (theoretically).
But only the Rupee has depreciated.So now a Dollar equals 52 Rs.
Which means if he sells his holdings worth Rs.4500 and converts that to Dollars, he gets 86.54 Dollars.(Loss of 13.46 %)
His investment was 100 Dollars and now his investments are worth just 86.54 Dollars (Theoretically we have assumed that the stock price remained the same).
But in real, the stock prices had fallen too, adding to more losses for Johnny.
Let us say the stock prices had fallen down by 35% (Our markets are down by 35% YTD)
Which means the stocks worth 4500 Rs when he had purchased would be trading now at Rs.2925.
That amounts to 56.25 Dollars.A whopping 50% loss to Johnny.(Initial investment is 100$)
This is the reason for the FIIs to take money out of the secondary markets.In the past 5 trading sessions they have sold stocks worth Rs.2500 Crores.
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