After two-month lull, FPIs take markets by storm

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Updated: October 29, 2015 2:13:03 AM

After two months of intense selling, foreign portfolio investors (FPIs) have turned net buyers this month, anticipating stability in global equities and better-than-expected macro-economic data from China.

fpiOn the other hand, domestic institutional investors (DIIs) were net sellers in October – the first time since January 2015. (PTI)

After two months of intense selling, foreign portfolio investors (FPIs) have turned net buyers this month, anticipating stability in global equities and better-than-expected macro-economic data from China.

Overseas investors are net buyers of $866.6 million so far this month – the highest monthly inflows in three months. In July 2015, FPIs had bought Indian equities worth $882.36 million, Bloomberg data showed.

According to Andrew Holland, CEO, Ambit Investment Advisors, foreign investors resumed investing in the Indian markets in October after positive data started coming from China. “The selloff by foreign investors during the last few months was over the concerns about China. During October, foreign investors resumed buying Indian equities as global markets stablised. However, the future inflows would depend on domestic factors like the outcome of Bihar elections,” Holland said.

fpi

The revival in fund inflows was evident through out the emerging market (EM) universe, not just India, with FPIs featuring as net buyers or partial sellers this month. Among EMs, Taiwan witnessed the highest inflows of $2.27 billion, followed by Brazil $1.17 billion.

“The scenario looks positive for all emerging markets in the near term, especially if a favorable outcome emerges from the meeting of US Federal Reserve meeting,” Holland added.

“Some FOMC participants have said they want to begin raising short-term interest rates. However, the majority of the FOMC does not seem convinced that action is needed at this moment, given the mixed nature of recent economic data, and the ongoing fragility of financial markets…an interest rate hike at this time would be disruptive,” said a team of Nomura economists, led by Lewis Alexander, MD and chief US economist.

On the other hand, domestic institutional investors (DIIs) were net sellers in October – the first time since January 2015. Local funds comprising banks, insurers and MFs, cumulatively sold equities worth R1,171.29 crore so far this month following continuous monthly purchases in the last eight months. In all, DII continue to be net buyers of R50,726.42 crore – the highest since 2008.

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