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FPI flows bullish on India despite coronavirus scare

Published : Feb 23, 2020, 11:48 am IST
Updated : Feb 23, 2020, 11:48 am IST

This month so far, FPIs have poured in Rs 23k crore into debt and equity

FPI flows have been bullish since September 2019
 FPI flows have been bullish since September 2019

New Delhi: Staying bullish on the Indian markets, overseas investors have pumped in a net amount of Rs 23,102 crore in February so far driven by positive sentiment around the budget and RBI's decision to maintain an accommodative stance in the latest monetary policy.

According to depositories data, foreign portfolio investors (FPI) invested a net sum of Rs 10,750 crore into equities and Rs 12,352 crore into debt, taking the total net investment to Rs 23,102 crore between February 3-20.

FPIs have been net buyers in the Indian markets since September 2019, the data showed.

"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 Himanshu Srivastava, senior analyst manager research, Morningstar Investment Adviser India.

The removal of divident distribution tax in the budget and the government's proposal to increase the FPI limit in corporate bonds from 9 per cent to 15 per cent have helped FPIs regaining their confidence back.

Additionally, 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," V K Vijayakumar, chief investment strategist at Geojit Financial Services said.

Tags: fpi investment, debt, equity, rbi policy, ddt
Location: India, Maharashtra, Mumbai (Bombay)