The investment received in the first 10 days of the month is much more than the monthly investments received in the last six months.
As soon as India came out of the nationwide lockdown, foreign portfolio investors returned to the country’s markets with massive equity investments. India received an FPI equity investment of Rs 21,876 crore in just the first 10 days of June, according to the National Securities Depository Limited (NSDL). The investment received in the first 10 days of the month is much more than the monthly investments received in the last six months. FPI investment in June has likely lifted the market sentiment after the last three months of lockdown forced FPI investors to pull out around Rs 1.4 lakh crore from the Indian markets.
The economic instability due to prolonged slowdown in India has kept the foreign investors on and off the Indian markets. FPI investors have been net sellers for two straight years to FY 2019-20 and also in the current fiscal so far. However, the rise in FPIs in the month of June is expected to bring optimism into the market as various rating agencies cut down India’s ratings. Recently, international rating agency Moody’s downgraded India’s sovereign rating by a notch to Baa3 from Baa2 with a negative outlook over a weak push for reforms, contributing to a prolonged period of slow growth.
While it is believed that downgrade in ratings hurts investors’ sentiment, RBI Governor Shaktikanta Das had said that foreign investors are now well-informed and thus they base their investment decisions on various aspects, not only on the country’s ratings. He had added that the investment trend showed that foreign investors like Indian markets and they will keep on investing in the country.
Meanwhile, Prime Minister Narendra Modi has recently announced the Atma Nirbhar Bharat package, which is aimed to help livelihoods, businesses, and industries across the country. The government’s efforts are also expected to have come under the lens of foreign investors. However, the steeply rising cases of coronavirus in the country still pose a threat to the green shoots of economic recovery which are witnessed immediately after the end of lockdown.