Foreign portfolio investors (FPIs) pumped in about Rs 9,301 crore into the Indian capital markets in May 2019. This may be due to expectations of business-friendly measures by the newly elected Bharatiya Janata Party (BJP) led Government.
Foreign investors did not sell in the first three weeks of May, but they started selling post announcement of the 2019 Lok Sabha election results.
As per the available data, FPIs injected a whopping Rs 7,919.73 crore into equities while they injected Rs 1,111.42 crore into the debt market. The overall FPI investment touched Rs 9,301 crore in May 2019.
FPIs had invested Rs 16,093 crore in April 2019, while they invested Rs 45,981 crore in March 2019 in the Indian capital markets.
The return of Prime Minister Narendra Modi has ensured continuation in the reforms started under NDA’s first term. Foreign investors took out Rs 6,399 crore in first two weeks of May as the election uncertainty loomed largely.
FPIs started coming back to the Indian capital markets when the exit polls predicted a BJP led National Democratic Alliance (NDA) government. Their inflow further intensified when the exit polls turned out to match the verdict on May 23 2019.
FPI investments were highly volatile prior to the announcement of the election results and became stable post announcement.
FPI investments may have residual inflows, and they would depend on the upcoming full budget, economic reforms and monetary policy apart from the global factors.