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More than 700 fresh foreign portfolio investors (FPIs) were registered with Sebi in the first four months of 2017-18, indicating that India remains an attractive destination, latest data from the regulator showed.
Besides, foreign investors have pumped in more than Rs 1 lakh crore into the Indian capital markets -- equity and debt -- during the period under review. This included Rs 84,000 crore in debt, with the remaining in equities.
Furthermore, several measures taken by the Securities and Exchange Board of India (Sebi) heightened its attractiveness, they added.
According to Vidya Bala, head of MF Research at Fundsindia.com, new registration of FPIs could be attributed to relative opportunities or better prospects of growth in the Indian economy compared to other emerging markets and developed nations.
Recently, Sebi raised FPIs' investment limit for government debt, permitted them to invest in unlisted corporate debt as well as securitised debt instruments and allowed direct entry to well-regulated foreign investors to invest in corporate bonds.
Going ahead, Himanshu Srivastava, Senior Research Analyst and Manager Research at Morningstar, said geopolitical risk is the major factor that may have adverse impact on FPIs' participation.
"If the tension between the US and North Korea continues or aggravates, this will increase the geopolitical risk and in that condition, the participation will become lower," he added.
In a big revamp, Sebi in 2014 released norms that clubbed different categories of foreign investors into a new class called FPIs. They have been divided into three categories as per their risk profile and KYC (know your customer) requirements while other registration procedures have been made simpler for them.
They are granted permanent registration as against the earlier practice of approval granted for one or five years to overseas entities seeking to invest in Indian markets. The registration remains permanent unless suspended or cancelled by Sebi or surrendered by an FPI.