Bharatiya Janata Party’s massive victory in Uttar Pradesh has lifted the foreign portfolio investment (FPI) in the country which has resulted in the pumping in of the highest monthly inflow ever recorded at Rs 54,255 crore into the Indian equities and debt markets in March. Until Tuesday, FPIs in the country was recorded at Rs 30,203 crore in the equity market and Rs 24,051.9 crore in the debt market, which is the highest monthly inflows in the equity and debt market ever, according to an Indian Express report. Earlier, in July 2014 the country recorded a high inflow in the equity and debt market at Rs 36,045 crore two months after the victory of PM Narendra Modi in the 2014 Indian General Elections.
According to market experts, the election results in the state of Uttar Pradesh has lifted concerns over political stability, due to which now most FPIs are of the view that the Narendra Modi-led central government will now push reform agenda.
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Managing Director of Asian Equity Strategist at BNP Paribas, Manishi Raychaudhuri said, “The mood among FPIs is clearly upbeat. And a significant part of that upbeat mood is contributed to by the present government. After the recent state election outcomes, it has only got reinforced as FPIs believe that it could provide the necessary political capital for the administration to engage in more reforms.”
The high FPI inflows in the month of March has strengthened rupee against the US dollar and has also set a high benchmark at a new all-time closing high for Sensex at the Bombay Stock Exchange (BSE) and for Nifty at the National Stock Exchange (NSE). Sensex and Nifty hit an all-time high on March 17 with the former at 29,648 and the later at 9,160. Following the high foreign investment, the rupee on March 29, closed at a 17-month high of 64.9 against the US dollar.