Foreign Portfolio Investors (FPIs) continued to remain positive towards the Indian equity markets and poured in Rs 40,710 crore in the first half of March, official data revealed. This inflow came amidst an improvement in the economic landscape in the world and a strong macroeconomic outlook at the domestic level.
Prior to the inflow, the investors bought Indian equities worth Rs 1,539 crore in February and dumped assets worth Rs 25,743 crore in January. At the same time, the investors continued to maintain a bullish outlook towards the debt market and injected Rs 10,383 crore in the period under review, reported PTI.
Commenting on the fund flows, V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, noted, “FPIs have been changing their strategy in response to the changes in the bond yields in the US. Therefore, now that US bond yields have again spiked up in response to stubborn inflation, they may again turn sellers in some of the days, going forward.”
The analyst noted that FPIs became big buyers in March, however, this number included some bulk deals executed via the stock exchanges and remained an incorrect indication of actual FPI activity. At the same time, he maintained that the trend of FPI investment continued to grow.
Explaining the growth of the FPI trading, Himanshu Srivastava, Associate Director Manager Research, Morningstar Investment Research India, said, “The improvement in the global economic environment as well as Indian macro-economic scenario have prompted FPIs to invest in high growth-oriented markets like India. Also, the recent correction in the market provided a buying opportunity.”
The strong inflows was driven by a robust GDP growth, expectation of a change in the RBI policy, along with a fall in rate by 25-50 basis points in the latter half of the current fiscal year, and an anticipation of another win for the ruling political party in the upcoming elections, explained Shantanu Bhargava, MD, Head of Discretionary Investment Services, Waterfield Advisors.
The overall inflow for the year so far crossed Rs 16,505 crore in equities and stood at Rs 52,639 crore in the debt market.
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