Foreign portfolio investors (FPI) remained net investors in Indian markets in the first half of August, pumping in Rs 28,203 crore in debt and equities on net basis in the period, according to the depositories data. Also, FPIs turned net investors in the debt segment in August after a gap of five months.
Market experts attributed the inflows to better-than-expected corporate earnings and increasing global liquidity. Depositories data showed that a net sum of Rs 26,147 crore was invested in equities and Rs 2,056 crore in the debt segment by FPIs between Aug 3-14. This translated into a total net investment of Rs 28,203 crore.
In the debt segment, overseas investors turned net investors after a gap of five months. Before this, FPIs had invested Rs 4,734 crore in February. FPIs have been net buyers for two consecutive months prior to this. They invested Rs 3,301 crore in July and Rs 24,053 crore in June on net basis.
Himanshu Srivastava, associate director – manager research, Morningstar India said, "A combination of global and domestic factors has resulted in huge net inflows from FPIs in Indian equities." He said there has been excess liquidity available in the global markets with major central banks pushing aggressive stimulus measures to combat the coronavirus pandemic and support their dwindling economies.
This surplus liquidity, due to the quantitative easing measures by developed economies, is finding its way into other markets with India too receiving its share and on the domestic front, better-than-expected corporate earnings have led to capital flows in Indian markets, Srivastava added. The co-founder and COO of Groww, Harsh Jain, said that FPI inflows are in correlation to the fall of treasury returns in the US.
"Lower returns mean more investors line up to invest in emerging markets like India in search of higher returns," he said. Investors are increasing their stakes in already strong and stable bluechip companies that command a big market share and have strong moats as these are companies that are most likely to not just survive the economic slowdown but also emerge stronger and with greater market share, Jain added.
Echoing similar views, Bajaj Capital said sentiments have improved amidst announcement of easing of lockdown restriction, positive news flows around drug and vaccine developments and Indian central bank's decision to follow accommodative monetary policy to support the growth. "Globally, the scenario is evolving and there are multiple factors which would dictate the direction of foreign flows going ahead," Srivastava said.
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