FPIs pump in Rs 75 bn in Aug so far as crude oil prices show improvement

Foreign investors have pumped in over Rs 75 bn into the Indian capital markets so far this month on better corporate earnings coupled with improvement in crude oil prices.

The latest inflow comes following a net infusion of over Rs 23 bn in the capital markets, both equity and debt, last month. Prior to that, overseas investors had pulled out over Rs 610 bn during April-June.

According to the latest depository data, foreign portfolio investors (FPIs) pumped in Rs 24 bn into equities and Rs 51.6 bn into the debt market during August 1-17, taking the total to Rs 75.77 bn.

The inflows can be attributed to the improvement in some of the underlying factors such as weakness in crude oil prices and better earnings from Indian Inc, said Himanshu Srivastava, Senior Research Analyst at Morningstar.

While this helped the market to make record highs, it would have also prompted FPIs to capitalise on its uptrend.

However, there is a bit of uncertainty and cautiousness among FPIs at the moment, he added. While the underlying factors are positively inclined, the focus of FPIs would be on their sustainability over the long term, Srivastava said.

Trump's stance on not increasing Fed Rate has changed the rate trajectory expectations and there is a halt on increasing exposure to US debt, Harsh Jain, COO at Groww.in, said.

Among the emerging markets, India shows significant signs of stability as IMF forecast has raised its economic outlook on India and the yield on the benchmark bonds has gone up to 7.78 per cent in August. All these factors have attracted investors, he added.

Overall, so far this year, FPIs have pulled out over Rs 15 bn from equities and more than Rs 360 bn from the debt markets.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

Business Standard is now on Telegram.
For insightful reports and views on business, markets, politics and other issues, subscribe to our official Telegram channel