Buoyed by the RBI rate cut and positive global cues, foreign investors have pumped in Rs 1,445 crore into the stock markets in the first week of this month, continuing their bullish stance of the past few months.
The equity markets have been witnessing net inflow by Foreign Portfolio Investors (FPIs) since March. Prior to that, stock markets saw an outflow of Rs 16,648 crore in the preceding two months (January-February).
Market experts attributed the inflow to RBI’s surprise decision to cut policy rate by 0.25 per cent to 6.25 per cent, a 6-year low.
Besides, improving sales numbers from automakers, a sign of revival in discretionary spending, the rupee holding higher against the dollar and no further flare-up on the geopolitical front added fuel to the rally, experts said.
A rebound globally on easing worries about future of German giant Deutsche Bank and a firming oil price provided a perfect setting, they added.
“We had a surprise cut by RBI… It was a breather post the bounce back after the geo-political issue. Given the neutral commentary from RBI there is limit room for further cut in the near term,” said Vinod Nair, Head of Research, Geojit BNP Paribas Financial Services.
According to depositors’ data, net investment by FPIs stood at Rs 1,445 crore in equities during October 3-7.
However, they pulled out a net sum of Rs 3,690 crore from the debt markets, taking the total net inflow to Rs 2,245 crore.
The latest inflow has taken FPI investment tally in equities to Rs 52,738 crore so far this year, while debt markets have witnessed an outflow of Rs 1,249 crore, resulting in a net inflow of Rs 51,489 crore.