Fabulous FY21: India biggest recipient of FPI inflows worth Rs. 2.6 lakh crore
- IBEF
- April 1, 2021
According to analysts, India has been the largest beneficiary of foreign portfolio investments this fiscal year, with net inflows of Rs. 2.6 lakh crore (US$ 35.41 billion), attributable to adequate liquidity in global markets and expectations of a faster economic recovery.
FY21 that witnessed major disruptions as a result of the coronavirus pandemic, concludes on Wednesday.
The highest amount invested in the equities segment was Rs. 2,74,503 crore (US$ 37.39 billion), ever since the National Securities Depository Ltd started making FPI data publicly accessible.
Previously, the financial year 2012-13 witnessed the largest inflow of Rs. 1.4 lakh crore (US$ 19.07 billion) into the equity market.
Mr. V K Vijay Kumar, Chief Investment Strategist at Geojit Financial Services, said, “Major FPI inflows were attracted to the financial sector, which included mortgage lenders, fintech firms, and private insurance companies.”
He said, “IT, financials, cement, and pharmaceuticals are projected to see increased FPI inflows in FY22 due to their high earnings visibility.”
According to depositories' data, foreign portfolio investors poured in a net sum of Rs. 2.74 lakh crore (US$ 37.39 billion) in equities and pulled out a total of Rs. 24,070 crore (US$ 3.28 billion) from the debt segment in 2020-21, while hybrid instruments witnessed an inflow of Rs. 10,238 crore (US$ 1.39 billion).
As of March 30, 2021, the overall net FPI inflow for this fiscal year was Rs. 2.6 lakh crore (US$ 35.41 billion).
Foreign portfolio investors were net buyers in all months between March 2020 and March 2021, except March, April, May, and September 2020.
Mr. Rusmik Oza, Executive Vice President and Head of Fundamental Research at Kotak Securities, said, “Governments' huge fiscal stimulus and central banks' monetary stimulus have resulted in inflows into a few emerging markets. Due to its stronger economic growth, India was the largest recipient of FPI flows among emerging markets in FY21.”
Furthermore, India's forex reserves increased by more than US$ 100 billion, allowing the Indian rupee to remain stable against the dollar and other currencies.
Despite pandemic risks and economic concerns, domestic stock markets have responded well in FY21, providing investors with substantial returns.
Mr. Himanshu Srivastava, Associate Director - Manager Research at Morningstar India, said, “Following the US presidential election, there was a rush of foreign capital into Indian equities.”
He said, “Other factors that ensured the sustainability of investment flows included the presence of excess liquidity in world markets and low interest rates, which directed foreign flows into emerging markets such as India.”
Mr. Harsh Jain, Co-Founder and COO at Groww, said, “As the scale of the pandemic was recognized in March 2020, the markets experienced massive corrections, and the general assumption was that the global economy would take a long time to rebound. As a result, western economies, especially the United States, printed money rapidly to boost their economies.”
He added, “Massive sums of money poured into India, assisting in the recovery of the markets. This huge inflow, on the other hand, has not been seen in other emerging markets.” He further suggested that foreign portfolio investors anticipated India's economic recovery to be much stronger and quicker than other emerging markets.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.
Partners
