FPIs still hopeful, invest Rs.4,400 cr in June

The Dollar Business Bureau

Showing optimism on India’s economy, foreign investors have invested nearly Rs.4,400 crore into the stock markets of the country so far this month, supported by the hopes of above normal monsoon. The investment comes after a huge inflow of over Rs.32,000 crore during the March-May period.

Foreign Portfolio Investors (FPIs) became net purchasers of equities in the month of March after taking out a huge Rs.41,661 crore from the market in the preceding four months (from November to February).

According to market experts,  the inflows are the result of positive sentiments by investors in the wake of robust macroeconomic data, positive earnings in the fourth quarter, some major government decisions and a prediction of good monsoon. In addition, investors are also optimistic on the clearance of the Goods and Services Tax (GST) bill in the upcoming monsoon session of Parliament.

According to available data with stock exchanges, FPIs pumped in Rs.4,394 crore in the markets till June 16, whereas they pulled out Rs.1,607 crore from the debt market, resulting in an overall inflow of Rs.2,787 crore ($417 million).

The inflows of capital by FPIs are generally termed as hot money because of their unpredictability. However, the funds from FPIs continue to be one of the major drivers of the country’s stock market. This year, FPIs have done investments of Rs.19,848 crore so far in equities whereas pulled out Rs.6,955 crore from the debt market, leading to a net inflow of Rs.12,893 crore.

Foreign Portfolio Investment is investment by foreign investors in Indian securities such as shares, bonds, securities, etc. The investors who make such type of investments are termed as Foreign Portfolio Investors (FPIs).

Recently, SEBI has stipulated that any equity investment by foreign investors less than 10 percent of the capital in a company would come under portfolio investment, while investment more than 10% would be termed as Foreign Direct Investment (FDI).