Foreign Portfolio Investors Turn Net Buyers After 2 Months

In the first half of September, foreign portfolio investors (FPIs) pumped in Rs 1,841 crore into the Indian capital markets, making them became net buyers after remaining net sellers in the previous two months.

According to experts, the inflows were triggered by improved investor sentiment on the back of easing US-China trade war and supporting macroeconomic data.

Latest depositories data shows that FPIs withdrew a net amount of Rs 2,031.02 crore from equities but put in Rs 3,872.19 crore in the debt segment during the 3 to 13 September period, which translates to a total net inflow of Rs 1,841.17 crore into the capital markets.

FPIs pulled out a net Rs 5,920.02 crore in August and Rs 2,985.88 crore in July from the domestic capital markets (both equity and debt) after Finance Minister Nirmala Sitharam introduced higher tax surcharge on the super-rich in the July 5 Budget. The higher surcharge especially ate into profits of FPIs registered as trusts.

After a rapid withdrawal of their funds from Indian stocks, Sitharaman withdrew the surcharge on 23 August. SEBI also relaxed regulatory and compliance framework for foreign investors in the previous month.

Apart from the signs of improvement in US-China trade relations, 4.3 percent growth in IIP for July, stimulus announcement from European Central Bank also contributed towards bolstering sentiment.

Experts say that if the Indian government continues with economic reforms and corporate earnings show recovery, the country will stay an attractive market for global investors.