So far in October 2019, the Indian capital markets have seen a net inflow of nearly Rs 3,800 crore from Foreign PortfoIio Investors (FPIs). This net inflow is possibly due to the various measures taken by the Indian Government to rejuvenate the ailing Indian markets. Also, positive global developments have boosted investors’ confidence.
As per the depositories data, the FPIs have infused as much as Rs 3,769.56 crore into the equity markets and Rs 58.4 crore to the debt markets. The overall FPI invesment across all segments have touched Rs 3,827.9 crore in October so far. The number is expected to touch Rs 3,875 crore by the end of the month.
The FPIs have gone on to become the net buyers for the second month on the trot. September 2019 witnessed FPIs pumping in a net Rs 6,557.8 crore into the Indian capital markets. September inflow was recorded on the back of massive net outflows in August and July.
The month of July witnessed FPIs setting a trend of outrageous selling, and the trend continued until August when the Finance Minister announced a slew of growth boosters. The development seen in September and October so far is indicating positive developments in the days to come.
Also Read: FPIs continue their selling trend despite growth boosters
Even though the government announced a set of growth boosters in August, they were outweighed by global factors such as unrest in Hong Kong and the Sino-American trade war. Eventually, the growth boosters coupled with a reduction in the corporate tax have weighed in on the markets to result in continuous rallying in October so far.
The signs of resumption of trade talks between the United States and China, interest rate cuts by the Federal Bank and RBI, and a reduction in the corporate tax have improved the market sentiment and boosted the confidence of investors. This was very critical as the Indian markets saw extensive selling in July and August.
Another global factor that influences the Indian markets is the exit of Britain from the European Union (EU). There was uncertainty in the Brexit deal, and now that the UK and the EU seem to have arrived at a conclusion, it has eased the foes of FPIs based out of the European countries.
For any clarifications/feedback on the topic, please contact the writer at vineeth.nc@cleartax.in
Engineer by qualification, financial writer by choice. I am always open to learning new things.
