Foreign investors have pumped Rs 9,500 crore (USD 1.4 billion) into the country’s capital markets so far this month, driven by sound progress on rollout of GST and contraction in current account deficit (CAD).
The trend is likely to continue in the coming weeks as markets regulator SEBI has decided to offer direct entry to well-regulated foreign investors for investing in corporate bonds, experts believe.
The latest infusion comes on top of a whopping inflow of Rs 25,904 crore in the preceding two months (July-August). Prior to that, foreign portfolio investors (FPIs) had pulled out a total of Rs 4,373 crore from the capital markets (equity and debt) in June and July.
Experts attributed the latest flurry in inflows to factors including sound progress on rollout of the Goods and Services Tax (GST), better corporate earnings and the US Federal Reserve’s decision not to lift interest rates.
Sentiments also got a boost, after the current account deficit (CAD) narrowed sharply to just USD 300 million, or 0.1 percent of GDP in June quarter and domestic passenger vehicle sales grew for the 14th straight month in August, they added.
According to depositors’ data, net investment by FPIs stood at Rs 5,643 crore in equities during September 1-23, while the same for debt markets was at Rs 3,905 crore, taking the total inflow to Rs 9,549 crore (USD 1.43 billion).
So far this year, FPIs have invested Rs 46,493 crore in equities while withdrawing Rs 3,442 crore from the debt market. This resulted in a net flow of Rs 43,051 crore.