With the US Federal Reserve now expected to raise interest rates at a slower pace, foreign portfolio investors (FPIs) are flocking back to India and other emerging markets, reports fe Bureau in Mumbai.
FPIs have already scooped up $3.08 billion worth of stocks in March so far, the highest in 14 months. They have also bought bonds in the six sessions to Wednesday, running up a bill of $644.35 million. The auction for limits to by government securities held on Monday saw a reasonably good response — bids were received for Rs 6,810 crore worth of securities against the notified amount of Rs 5,035 crore. Market watchers say investors are reassured the government has decided to rein in the fiscal deficit since that would give the Reserve Bank of India room to cut rates.
Lower interest rates, investors feel, will boost growth and corporate earnings.
The Sensex, however, remains below the 25,000 mark, ending Tuesday’s session at 2,4900.46 points.
The higher foreign flows have seen the local currency appreciate — the rupee closed at 66.54 to the dollar on Tuesday, having gained 2.83% in March.