Prior to that, FPIs pulled out over Rs 23,000 crore from the capital market (equities and debt) in the past two months on fears of an economic slowdown in China, which led to a global sell-off.
They withdrew Rs 5,784 crore last month and another Rs 17,524 crore in August, the highest net outflow by FPIs in a single month since 1997. The segregated data prior to 1997 are not available.
Investor appetite returned after RBI Governor Raghuram Rajan last month pulled off a surprise by announcing a bigger -than-expected policy rate cut of 50 bps to 6.75% -- the lowest in four and a half years -- to spur growth, said Gaurav Jain, Director, Hem Securities.
Furthermore, prospects of a delay in the rate hike by the US Federal Reserve from the near-zero level has helped the inflows.
"The odds of a US rate hike in October have lessened due to poor payroll data," said Vinod Nair, Head-Fundamental Research at Geojit BNP Paribas Financial Services.
Some other macro parameters helped too, with fiscal deficit for April-August narrowing to 66.5% of the full-year target and infrastructure output growing 2.6% in August.
Since the beginning of the year, overseas investors have made a net investment of Rs 22,654 crore in equities and Rs 39,802 crore in debt market.
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.