Overseas investors have poured in USD 2.5 billion into the Indian capital markets so far this month, taking the total inflow to around USD 12 billion since the beginning of the year.
Analysts expect the inflows to accelerate further going ahead following the passage of bills related to insurance, coal allocation and mining and assurances in the Union Budget to revisit controversial issues like General Anti-Avoidance Rule (GAAR).
Foreign Portfolio Investors (FPIs) have bought shares worth a net Rs 9,931 crore (USD 1.6 billion) during March 2-20 period. In the debt segment, their net inflows stand at Rs 5,788 crore (USD 931 million) taking the total to Rs 15,719 crore (USD 2.53 billion), as per the data compiled by Central Depository Services Ltd.
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The inflows take the foreign investment level in the country’s capital markets (equity and debt segments) to Rs 73,971 crore (approx. USD 12 billion) so far this year.
Market participants attributed the robust inflows to positive investor sentiment driven by the government’s announcement of several reform measures.
Besides, Finance Minister Arun Jaitley announced a slew of measures to attract overseas investment in the country in the recent Union Budget.
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In 2014, the net inflows by overseas investors in debt markets was Rs 1.59 lakh crore, while the figure for equities stood at Rs 97,054 crore. Overall net investment by foreign investors stood at Rs 2.56 lakh crore last year.
To soothe investors’ nerves, Mr. Jaitley had deferred the controversial GAAR by two years, saying that its immediate applicability can create ‘panic’ in markets.