Foreign portfolio investors (FPIs) continue to bet on India with their net investments in Indian equities market already scaling $31.7 billion level thus far in fiscal year 2020-21.This is the highest ever FPI inflow in a financial year since FY 2013 when they infused a net sum of $25.8 billion or Rs. 1.4 trillion into Indian equities, as per data.
Moreover, after Nirmala Sitharaman's wealth and wellness-focused Budget 2021, the FPIs pumped in more than $1 billion in Indian equities in the last two days. As per exchanges' provisional data, on February 2, FPIs put in $847 million or Rs. 6182 crore into Indian equities. This is after they remained on the sidelines during the last week.
"Foreign investors have been steady buyers of Indian equities since the Nifty50 was around the 10,700 levels. The overall improvement in the Indian economy has made them realise that this is not a flash in the pan. Budget 2021 proposals have reinforced their positive stance on India. Plus, there is ample liquidity globally that has found its way into emerging markets, including India," explains U R Bhat, managing director at Dalton Capital.
As per the estimates of Morgan Stanley, all time high US dollar inflow was witnessed during the last week to dedicated Asia or emerging market equity fund amounting to $8.7 billion, which marks the 18th consecutive week of inflow into the asset category.
"Euphoric fund inflow (outflow) episodes have invariably been associated with market tops (troughs) throughout MSCI EM's volatile history," said Jonathan F Garner, chief Asia and emerging market strategist at Morgan Stanley in a February 2 co-authored report.
The robust inflow in Indian equities pushed the benchmark indices to record high, with Sensex and Nifty notching new record highs in intra-day deal on Wednesday. So far in FY 2021, the indices have made whopping gains of 70 per cent and 71 per cent, respectively.
Nonetheless, as per experts any change in policy stance by the US Federal Reserve or other global central banks over the next few months, could have a bearing on the foreign flow into EMs, including India.