S Ranganathan, head of research at LKP Securities, said, FPI inflow into Indian markets is mainly due to "prospects of a good third-quarter earnings expectations coupled with hopes of a reformist budget".
FPIs have been strong buyers in the Indian market since 10,700 levels and have seen an upside of 35%, which, according to experts, could have triggered profit booking.
Foreign portfolio investors (FPIs) have pumped Rs 5,156 crore into Indian capital markets in the first six trading sessions this year amid expectations of strong third-quarter earnings and a reformist budget. As per depositories data, FPIs invested a net Rs 4,819 crore in equities and Rs 337 crore in debt segment between January 1 and 8. This took the total net investment to Rs 5,156 crore during the period under review.
S Ranganathan, head of research at LKP Securities, said, FPI inflow into Indian markets is mainly due to “prospects of a good third-quarter earnings expectations coupled with hopes of a reformist budget”.
Besides, India’s low number of COVID-19 cases compared to other countries is also a major reason why investments are flowing into India, as many other countries have restarted lockdowns in the wake of rising cases, Harsh Jain, co-founder and COO at Groww, said.
Quantum of investment received by India in 2020 is among the highest by emerging markets, while most emerging markets actually saw outflows, he said.
“India has emerged as an attractive investment destination as hopes of a strong economic recovery have risen after seeing the recovery in the past few quarters,” Jain added.
VK Vijaykumar, chief investment strategist at Geojit Financial Services, said India, China, Russia and South Korea are the favourite destinations of the FPIs. “FPIs have been buying the market leaders in IT and private sector banks and select blue chips across sectors,” he said.
Going forward, FPIs are likely to remain strong in 2021 too, as liquidity infusion by the leading central banks is expected to sustain in the coming months too, Vijaykumar said.
Rusmik Oza, executive vice president, Head of Fundamental Research at Kotak Securities, noted that quantum of FPI flows was less in January so far.
“There could have been some held back of FII flows due to the Georgia state elections. Now, since that event risk is over FPI flows could resume in a bigger way from next week,” he said.