BackNet FPI inflow in Indian stocks at $2 billion in November so far
India's improvement in ease of doing business ranking, its bank recapitalisation plan and a stable rupee, seen as reasons for the surge in FPI inflow
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New Delhi: Foreign investors have pumped in a whopping over $2 billion in the Indian equity markets this month so far, enthused by government’s PSU bank recapitalisation plan, improvement in ease of doing business ranking and a stable currency.
This follows a net FPI inflow of over Rs3,000 crore in stock markets last month. Prior to that, foreign portfolio investors FPIs had pulled out more than Rs24,000 crore in the previous two months (August and September).
According to depository data, FPIs infused a net sum of Rs14,348 crore ($2.2 billion) in equities during 1-17 November. However, they pulled out Rs1,287 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 among 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 FPI 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 the goods and services tax (GST) on the domestic economy and sluggish pace of economic recovery," Srivastava said.
Finance minister Arun Jaitley on 24 October announced the PSU bank recapitalisation programme of Rs2.11 trillion, out of which Rs1.35 trillion will come from recapitalisation bonds, and the rest from markets and budgetary support. Overall, FPIs have invested Rs51,756 crore in equities this year and another Rs1.45 trillion in debt markets.
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