Foreign investors have pumped in nearly Rs 82.85 billion into the Indian capital markets so far this month, after pulling out hefty funds in October, due to fall in crude oil prices, recovery in rupee and improvement in the liquidity situation.
The recent infusion comes following a net outflow of more than Rs 389 billion in October, which was the steepest withdrawal in nearly two years.
Foreign portfolio investors (FPIs) had pulled out over Rs 210 billion from the capital markets (both equity and debt) in September. Before that, they had put in Rs 75 billion in July and August.
According to depositories data, FPIs infused Rs 38.62 billion in the equity markets during November 1-16, and Rs 44.23 billion in the debt market, taking the total to Rs 82.85 billion (USD 1.14 billion).
Himanshu Srivastava, Senior Analyst Manager Research, Morningstar Investment Adviser India, attributed the latest inflow to fall in crude prices, recovery in rupee against the dollar and improvement in the liquidity situation.
On the global front, escalating trade war tensions between US and China has caused widespread uncertainty in emerging markets. This, coupled with increasing interest rates globally, has turned investors the world over risk-averse, which prompted them to look for other attractive and safer alternatives, he added.
“I don’t expect any significant inflow from FPIs in the remaining part of this year. Movement of rupee versus dollar, direction of crude prices, domestic liquidity, upcoming state elections as well as general elections next year are some of the factors which the FPIs would be watching closely.
“Plus, there are other emerging markets like China and Brazil which are better placed in terms of valuation compared to India.
“Looking at all these factors and the ongoing scenario, there is still some time before India sees strong inflows from FPIs,” he added.
FPIs have pulled out over Rs 920 billion from the capital markets so far this year. This includes more than Rs 380 billion from equities and nearly Rs 540 billion from the debt market.