IBEF: February 25, 2020
So far in February 2020, the investment made by overseas investors in Indian market stood at Rs 23,102 crore (US$ 3.31 billion), driven by positive sentiment around the budget and RBI’s decision to maintain an accommodative stance in the latest monetary policy.
According to the depositories data, foreign portfolio investors (FPI) invested a net sum of Rs 10,750 crore (US$ 1.54 billion) into equities and Rs 12,352 crore (US$ 1.77 billion) into the debt segment, taking the total net investment to Rs 23,102 crore (US$ 3.31 billion) between February 3-20.
The data showed that since September 2019, FPIs have been net buyers in the Indian markets.
“There are multiple factors like positive sentiments around the budget and RBI’s decision to maintain an accommodative stance in the latest monetary policy that have had foreign investors hooked to the Indian markets despite the challenges faced by the domestic economy and slow pace of growth in corporate earnings,” said Mr Himanshu Srivastava, senior analyst manager research, Morningstar Investment Adviser India.
The FPIs growth is on the back of the removal of DDT in the Union Budget along with the government’s proposal to increase the FPI limit in corporate bonds from 9 to 15 per cent.
Moreover, fixed income markets have witnessed positive flows largely on the back of RBI’s decision to maintain an accommodative monetary policy stance, Srivastava said.
Globally, he said, there has been a risk-off sentiment among foreign investors with the outbreak of coronavirus epidemic. FPIs have been particularly wary of investing in markets, which rely on tourism, as the spread of virus can adversely impact their prospects and economic growth.
“From this perspective, Indian equity market is better positioned among such group of countries and hence it has been attracting foreign flows,” he added.
Going forward, “FPIs don’t expect the Fed and European Central Bank to tighten policy soon. FPI flows will continue so long as the leading central banks are in accommodative monetary policy,” Mr V K Vijayakumar, chief investment strategist at Geojit Financial Services said.
Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.