|While a rate hike by the US Federal Reserve could lead to outflow of funds from emerging market equities, another worrying factor that is now emerging on the global front is the persistent fall in crude oil prices, which if continues for an extended period of time could prompt some of the sovereign wealth funds (SWF) to cut their equity market investments. Among the various categories of FPI, sovereign wealth funds are the largest investors in the Indian market.
According to data available with the National Securities Depository Ltd, sovereign wealth funds hold equity assets worth `1.73 lakh crore as at the end of October 2015. “With the sharp fall in the global crude oil prices, most of the oil producing countries especially in the Middle-East would find it difficult to meet their budget deficits. If the oil prices continue to remain weak and fall further from the current levels, these sovereign wealth funds will not have any other option than to sell their equity market investments. But this will happen over a period of time,” said Gopal Agrawal, CIO, Mirae Asset Global...............................................Full Article: Source