Foreign investors have infused close to Rs 8,000 crore into Indian equities in the first four trading sessions of June as risk-on sentiment improved amid rapidly falling new Covid cases and robust corporate earnings. The inflow comes following a net withdrawal of Rs 2,954 crore in May and Rs 9,659 crore in April, data with depositories showed. Going ahead, improvement in the scenario on the coronavirus front in the country and pick-up in the vaccination drive may attract higher FPIs investments, Himanshu Srivastava, Associate Director - Manager Research, Morningstar India, said.
According to the data, foreign portfolio investors (FPIs) put in a net sum of Rs 7,968 crore in the Indian equity market during June 1-4. Prior to April's outflow, FPIs had been infusing money in equities since October. They invested over Rs 1.97 lakh crore in equities during October 2020 to March 2021. This included a net investment of Rs 55,741 crore in the first three months of this year. "With Covid numbers rapidly falling, more foreign investors are feeling comfortable investing in the Indian economy," Harsh Jain, Co-founder and COO, Groww, said. Though big parts of the country remain locked down, some areas with low cases are starting ease restrictions following which certain parts of the economy are starting to function again, he added.
Making a similar statement, Morningstar India's Srivastava said that "signs of improvement in the coronavirus situation with daily Covid-19 cases falling consistently in India over the last few weeks have provided comfort to foreign investors. The daily case count has come down below 1.5 lakh mark, along with improving recovery rate." "This coupled with good quarterly results and a positive earnings growth outlook over the long-term prompted FPIs to turn their attention again on Indian equities.
In addition to this, better than forecasted GDP number for the Covid-hit 2020-21 also boosted investor sentiments," he added. Divam Sharma, co-founder of Green Portfolio, said that fourth quarter results from most of the listed players continue to surprise foreign investors on the positive side. In addition, there is high optimism with global large economies opening up, exports going up, and vaccination being pushed across the globe, he added. Apart from equities, FPIs have poured just Rs 22 crore in the debt markets during the period under review. "Debt continues to be a laggard in terms of inflows as the visibility of rate of interest rising is still low in the near future and there is a rising inflationary pressure from high liquidity resulting in money chasing risky assets to maintain the purchasing power of money," Green Portfolio's Sharma said. FPIs have not turned aggressively bullish over the macro-indicators of the Indian economy which is why they have put in low amount in debt, Kaushlendra Singh Sengar,Founder and CEO at INVEST19, said.
So far this year, overseas investors have put in a net sum of Rs 51,094 crore in equities, however, they pulled out net amount of Rs 17,300 crore from debt securities. According to Morningstar India's Srivastava, focus for FPIs would continue to be on the pace of coronavirus vaccination drive in India and how soon India gains back economic momentum. "Though the near-term impact of the pandemic on earnings persists, but if the government ramp up the vaccination drive and economy activity gains pace, then Indian markets may again receive foreign investments on a consistent basis," he added.