Overseas investors have pumped in more than $2 billion so far in the country’s capital market this month, helped by stable outlook for the rupee. Interestingly, most of the funds have been invested in the debt markets. According to latest depository data, Foreign Portfolio Investors (FPIs) invested a net Rs 4,157 crore in equities during May 2-19, while they poured Rs 12,941 crore in the debt markets during the period under review, translating into a net inflow of Rs 17,099 crore ($2.66 billion).
This comes following a net inflow of close to Rs 94,900 crore in the last three months (February-April) on several factors, including expectations that BJP’s victory in recently held assembly polls will accelerate the pace of reforms. Prior to that, such investors had pulled out over Rs 3,496 crore from debt markets in January.
“FPI flows into Indian equities are muted as the market has run up in the past four months and valuations are no longer cheap. Having said this, we are seeing some flows coming back to equity market for past few days,” Sharekhan Head Advisory Hemang Jani said.
“The differential spread between 10-year bond yields in the US and India is still around 4.5-5 per cent, this, coupled with stable outlook for the Indian currency bodes well for FPI flows into debt market,” Jani added.With the latest inflow, total investment in capital markets (equity and debt) has crossed over Rs 1 lakh crore this year.