Foreign investors have pumped in a whopping over USD 2 billion in the Indian equity markets this month so far, enthused by government’s announcement of recapitalising PSU banks, improvement in global sentiment and stable currency.
This follows a net inflow of over ₹3,000 crore in stock markets last month. Prior to that, FPIs had pulled out more than ₹24,000 crore in the previous two months (August and September).
According to depository data, foreign portfolio investors (FPIs) infused a net sum of ₹14,348 crore (USD 2.2 billion) in equities during November 1-17.
However, they pulled out ₹1,287 crore from the debt market during the period under review.
“The inflow could be attributed to some of the positive developments in the recent times. One amongst them is the government’s announcement of recapitalising public-sector banks, which is expected to enhance lending and propel economic growth.
“This is particularly seen as a positive step after the questions were raised from various quarters on the government’s ability to effectively implement economic reforms. Additionally, slight improvement in global sentiments and stable currency could have also turned the tide in India’s favour,” Morningstar India Senior Analyst Manager Research Himanshu Srivastava said.
The inflow was further triggered with the news of India faring well in the World Bank’s ease of doing business index and a jump in core sector growth, he added.
“This positive news provided a much-needed breather to FPIs who were concerned about the short-term impact of demonetisation and GST on the domestic economy and sluggish pace of economic recovery,” Mr. Srivastava said.
Finance Minister Arun Jaitley on October 24 announced the PSU bank recapitalisation programme of ₹2.11 lakh crore, out of which ₹1.35 lakh crore will come from recap bonds, and the rest from markets and budgetary support.
Overall, FPIs have invested ₹51,756 crore in equities this year and another ₹1.45 lakh crore in debt markets.
