Foreign investors pumped over Rs 19,700 crore into the country's stock markets
in November, the highest in eight months, mainly due to government's plan to recapitalise PSU banks and surge in India's ranking in the World Bank's ease of doing business.
In addition, such investors put in Rs 530 crore in the debt markets
during the period under review.
According to depositories data, foreign portfolio investors (FPIs) invested a net amount of Rs 19,728 crore in equities last month.
This is the highest net investment by FPIs
since March, when they had poured in Rs 30,906 crore in the equity
It has been a tremendous journey for the Indian equity markets
in 2017. After taking a break from buying into Indian equities in August and September, FPIs
bought equities in abundance in November.
The strong inflow could be largely attributed to the government's decision to recapitalise public-sector banks, which is expected to enhance lending and propel economic growth, said Morningstar India's senior analyst manager (research) Himanshu Srivastava.
"This is particularly seen as a positive step after the questions have been raised from various quarters on the government's ability to effectively implement economic reforms. Further, the slow pace of economic growth was also believed to be due to rising non-performing assets (NPAs) problem in public sector banks, hence this decision provided a much-needed impetus to FPIs
to again look back at Indian equity
space," he added.
Finance Minister Arun Jaitley had announced the PSU bank recapitalisation plan of Rs 2,11,000 crore, out of which Rs 1,35,000 crore will come from recapitalisation bonds, and the rest from markets
and budgetary support.
Additionally, the news
about India faring well in the World Bank's Ease of Business index and a jump in core sector growth also turned the tide in India's favour, Srivastava said.
"These (bank's recapitalisation plan and world bank's ranking) and positive developments in the recent times provided a much-needed breather to FPIs
who were concerned about the short-term impact of demonetisation and goods and services tax (GST) on the domestic economy and sluggish pace of economic recovery," he added.
Yet another positive piece of news
has come from Moody's Investor Services, which upgraded its India rating by a notch to 'Baa2' from 'Baa3' with a stable outlook, citing improved economic growth prospects driven by the government reforms.
have invested Rs 53,800 crore in equities so far in 2017 and another Rs 1.46 lakh crore in debt markets.