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FPIs net inflow hit 7-Month high of Rs. 22,350 cr in October

Foreign investors pumped in over Rs. 22,350 crore ($3.44 billion) in the Indian capital markets in October, the highest in seven months, buoyed by RBI’s rate cut and positive macroeconomic numbers.

Most of the fresh capital has been infused in the debt market.

The net inflow in equities stood at Rs. 6,650 crore last month, while it was Rs. 15,700 crore for debt, translating into a total of Rs. 22,350 crore ($3.44 billion), as per data compiled by the depositories.

This is the highest investment by FPIs since March when they had poured in Rs. 20,723 crore into Indian markets.

The huge inflows during October also reverses the outflows seen during the past two months. 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 triggered a global sell-off.

They withdrew Rs. 5,784 crore in September and 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 turned positive after Reserve Bank Governor Raghuram Rajan last month pulled off a surprise by announcing a bigger-than-expected policy rate cut of 50 bps to 6.75 per cent — the lowest in four and a half years – to spur growth, said Gaurav Jain, Director, Hem Securities.

Furthermore, RBI’s move of increasing the FPI limit in government securities has helped overseas investors park more money in the debt market.

Besides, positive macro parameters also helped improve the sentiments.

Since the beginning of the year, overseas investors have made a net investment of Rs. 27,697 crore in equities and Rs. 55,096 crore in debt market.

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