FPIs' bullish stance continues; pump in Rs 63.10 bn in Nov on crude, rupee

Foreign investors have pumped in Rs 63.10 billion into Indian capital markets this month so far, after pulling out massive funds in October, on easing crude oil prices and a strengthening rupee.

Of these, most of the funds were infused in the debt market by foreign portfolio investors (FPIs), the latest data with depositories showed.

The recent inflows come after a net outflow of more than Rs 389 billion in October, which was the steepest withdrawal in nearly two years.

FPIs pulled out over Rs 210 billion from capital markets (both equity and debt) in September. Before that, they had put in Rs 750 billion in July and August.

Overseas investors infused Rs 9.23 billion in the equity market during November 1-22, and Rs 53.87 billion in the debt market, taking the total to Rs 63.10 billion (USD 862 million), the data showed.

According to experts, an appreciating rupee and fall in oil prices provided a leeway to India's macros and accordingly influenced FPIs to change their stance towards emerging markets.

"The latest inflow could be attributed to falling in crude prices, recovery in rupee against the dollar and improvement in the liquidity situation," Himanshu Srivastava, Senior Analyst Manager Research, Morningstar Investment Adviser India said.

On the global front, escalating trade war tensions between the US and China caused widespread uncertainty in emerging markets. This, coupled with increasing interest rates globally, turned investors risk-averse the world over, which prompted them to look for other attractive and safer alternatives, he added.

"I don't expect any significant inflow from FPIs in the remaining part of this year. Movement of rupee versus the dollar, the direction of crude prices, domestic liquidity, upcoming state elections as well as general elections next year are some of the factors which the FPIs would be watching closely.

"Plus, there are other emerging markets like China and Brazil which are better placed in terms of valuation compared to India.

"Looking at all these factors and the ongoing scenario, there is still some time before India sees strong inflows from FPIs," he added.

FPIs have pulled out over Rs 940 billion from the capital markets so far this year. This includes more than Rs 410 billion  from equities and nearly Rs 530 billion from the debt market.