First Week of November 2019 Saw FPIs Infusing Rs 12,000 Crore

The rallying of markets has attracted overseas investors who have infused more than Rs 12,000 crore into the Indian markets in the first week of November 2019. The market sentiment has improved considerably due to the economic and growth boosters announced by the Finance Minister in two shots. 

The foreign portfolio investors (FPIs) have remained the net buyers, says the latest data from the depositories. As per the data, the FPIs have injected a whopping Rs 6,433.8 crore into the equities market while they infused Rs 5,673.87 crore into the debt market in the November first week. The total investment has touched Rs 12,107.67 crore.

This FPI inflow is following the two back-to-back months of foreign investments. In September 2019, overseas investors pumped in a net Rs 6,557.8 crore while in October 2019 they invested a net Rs 16,464 crore. With more than half the month to go, November 2019 is expected to see more FPI inflow due to improving global factors. 

Yet, the industry experts are saying that the FPI purchasing is not up to the mark and is only half their potential. Even though the average FPI purchase has been around Rs 550 crore per day in the first week of November 2019, it is way below their past record when they purchased nearly Rs 2,000 crore per day.

The growth and economic boosters announced by the government has played a more significant factor than improving global factors. Reducing the corporate tax rate has been the most crucial factor behind improving market sentiment.

The Reserve Bank of India has slashed the interest rates. The RBI is expected to announce another cut in its next review meet to revive the ailing realty sector. 

Also Read: FPIs Have Infused Nearly Rs 3,800 Crore in October So Far

Another significant factor contributing to the rallying of markets is that there are signs of the Sino-American trade war ending soon. The Federal Reserve slashed the interest rates for the third time this year, and this has given more money in the hands of investors. More money in the hands of investors will lead to higher investments. 

The Finance Minister of India withdrew the increased surcharge on the super-rich, and FPIs registered as trusts. This move can be considered instrumental in reviving the markets which had plummeted after July 2019. The government’s decision to recapitalise the PSU banks seems to have weighed in on the markets.

The BSE Sensex and NSE Nifty had touched crucial levels of 40,000 and 12,000 points respectively for the first time in May 2019. After that, their movement was downwards, and they recorded significant falls at a time when they were expected to perform better than ever before. 

However, things changed in the mid-September. The markets began rallying. The BSE Sensex finally regained the lost glory and crossed the critical level of 40,000 points on 30 October 2019 while the NSE Nifty breached its crucial level of 12,000 points in the November first week. The FPIs being the net buyers is a positive for Indian markets. 

For any clarifications/feedback on the topic, please contact the writer at vineeth.nc@cleartax.in