Foreign portfolio investors (FPI) have remained net buyers to the tune of Rs 14,649 crore in Indian markets in January, amid availability of global liquidity and emerging markets being a preferred destination for foreign funds, reported by PTI. Also Read: Indian Markets to remain volatile amidst earning season, RBI policy and Nirmala Sitharaman’s Union Budget 2021-22
As per the FPI statistics available with depositories, overseas investors pumped in a net of Rs 19,473 crore into equities but pulled out Rs 4,824 crore from the debt segment between January 1 and January 29. Also Read: India needs to make efforts to get rating upgrade in line with fundamentals, says Chief Economic Adviser K V Subramanian
The total net investment in January stood at Rs 14,649 crore. Also Read: What does GameStop stock drama tells us about the worthlessness of stock markets?
“Excess liquidity in the global financial markets with central banks and governments worldwide announcing stimulus measures to support their dwindling economies, made its way into the emerging markets with India too benefitting from this trend,” Morningstar India Associate Director (Manager Research) Himanshu Srivastava said.
Due to uncertainty regarding the budget proposals, FPIs have been a bit apprehensive about the direction of the market going ahead and, therefore, they have seen selling in the past few days, said Geojit Financial Services Chief Investment Strategist V K Vijayakumar.
He further noted that India has been one of the highest recepients of FPI funds among emerging markets in November and December which played a significant role in pushing the Sensex to record 50,000 levels. Also Read: Union Budget 2021 will be a part of mini-budget series launched by FM last year, says PM Modi
“Given the uncertainty surrounding the Budget, FPIs would have preferred to book some profit at these levels,” Srivastava said. Also Read: Union Budget 2021: New mobile app to provide hassle-free access to all Budget documents
Giving an overview of emerging markets, Kotak Securities Executive Vice-President and Head (Fundamental Research) Rusmik Oza said that except for India and few more countries, most emerging markets are witnessing FPI selling in a big way. Also Read: Automobile dealers’ association seeks demand-led growth-oriented Union Budget 2021
“Countries like South Korea and Taiwan have seen month-to-date FPI outflows of USD 5.3 billion and USD 3.4 billion, respectively,” Oza said.
Countries like India and some of the oil-producing nations can still expect positive FPI flows in the medium term, he further added. Also Read: India: Despite hype, demonetization missed all goals as Currency in Circulation grew by 13.2% to 27.7 lakh cr in first nine months of FY21
On current selling by FPIs, Groww co-founder and Chief Operating Officer Harsh Jain said said “such movements happen from time to time”.
He added that in the longer term, India continues to remain an attractive destination for investment among emerging market. It has been validated by the FPI inflows into the country in 2020, a year when nearly all other emerging markets saw only outflows, Jain said. Also Read: Farm bills have potential to represent significant step forward for agriculture reforms in India, says IMF