After 2-month selling streak, FPIs invest Rs 15,958 cr in first week of May

Reversing their two-month selling streak, overseas investors pumped in a net Rs 15,958 crore in the Indian capital markets in the first week of May.

As per the latest depositories data, foreign portfolio investors (FPI) infused a net Rs 18,637 crore in equities, but pulled out a net Rs 2,679 crore from the debt segment between May 1-8, taking the cumulative inflow to Rs 15,958 crore.

The latest inflow comes after two consecutive months of huge withdrawals.

In March, FPIs had withdrawn a record amount of over Rs 1.1 trillion on a net basis, while Rs 15,403 crore was pulled out in April from the domestic capital markets (both equity and debt).

"Despite uncertainty looming large over the severity of the possible impact of coronavirus pandemic on the global as well as Indian economy, FPIs surprisingly changed their stance this week as they turned net buyers in the Indian markets," said Himanshu Srivastava, senior analyst manager research, Morningstar India.

The recent investment could be attributed to India doing fairly well compared to many other countries in terms of containing Covid-19 pandemic from spreading aggressively, Srivastava said.

In addition to that, measures announced by the government and the RBI periodically to revitalise the sagging economy would have also resonated well with investors, he added.

However, he cautioned that though it is a welcome shift in FPIs' investment pattern, it would be premature to term it as a change in trend as this could be short-term buying given the relatively attractive valuations.

The growing fears of a prolonged global economic slowdown has triggered a risk-averse environment with investors taking a flight to safety, he said. Harsh Jain, co-founder, and COO at Groww pointed out that "we are seeing more tensions rise globally as Trump threatens action against China...Such news does affect the global investor's sentiments."

Going forward, Srivastava said FPIs would track how selective relaxations in the lockdown and gradual opening up of the economic activity in the country play out.