For the second consecutive month, foreign portfolio investors (FPI) remained net buyers in July by pumping in Rs 3,301 crore in the Indian markets amid hopes of a coronavirus vaccine. Depositories data showed that a net sum of Rs 7,563 crore was invested in equities while Rs 4,262 crore was withdrawn by FPIs in the whole month of July.
The net investment during the month stood at Rs 3,301 crore when compared to a net of Rs 24,053 crore in the previous month.
Some factors that led to investment in July include a surge in markets which provided FPIs with good profit booking opportunity, improvement in sentiment on the back of rising hopes of a coronavirus vaccine, said Himanshu Srivastava, associate director - manager research, Morningstar India- as quoted in a PTI report.
Noting that the investment in July was lower than that in June, Srivastava said FPIs adopted a "cautious stance" while investing in India as COVID-19 cases continued to surge even as many states implemented fresh lockdown measure thus fanning concerns that growth in the domestic economy could be delayed further.
In the last week of July, FPI flows in emerging markets have been mixed with South Korea and India receiving positive flows whereas most of the other markets witnessing outflows, a PTI report said quoting another analyst. Firm US markets and correction in the dollar index is favourable for emerging markets.
In the times to come, "surge in coronavirus cases globally, increasing tension between US and China, and a sharp rise in coronavirus cases in India with the economy still limping may act as a deterrent for foreign investors," Srivastava noted.