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Foreign investors have pumped over $2.6 billion in the country's capital markets this month so far, propelled by government's announcement of recapitalising PSU banks and India faring well in the World Bank's 'ease of doing business index'.
According to depositories data, foreign portfolio investors (FPIs) infused Rs 16,455 crore in equities during November 1-24, besides, they put in Rs 754 crore in the debt market during the period under review, resulting in an inflow of Rs 17,209 crore ($2.65 billion).
"The inflow could be attributed to some of the positive developments in the recent times. One amongst them is the government's announcement of recapitalising public-sector banks, which is expected to enhance lending and propel economic growth.
"This is particularly seen as a positive step after the questions were raised from various quarters on the government's ability to effectively implement economic reforms. Additionally, slight improvement in global sentiments and stable currency could have also turned the tide in India's favour," Morningstar India Senior Analyst Manager Research Himanshu Srivastava said.
India gained 30 places in the World Bank's ease of doing business index to 100th among 190 nations this year.
"This positive news provided a much-needed breather to FPIs who were concerned about the short-term impact of demonetisation and GST on the domestic economy and sluggish pace of economic recovery," Srivastava said.
Recently, the US-based Moody's has upgraded India's sovereign credit rating by a notch to 'Baa2' with a stable outlook citing improved growth prospects driven by economic and institutional reforms.
Finance Minister Arun Jaitley on October 24 announced the PSU bank recapitalisation programme of Rs 2.11 lakh crore, out of which Rs 1.35 lakh crore will come from recap bonds, and the rest from markets and budgetary support.