FPIs net inflow tops Rs 19k cr in Oct, a 6-month high

Foreign investors have pumped in a staggering over Rs 19,000 crore in the Indian capital markets in October so far -- the highest level in six months -- buoyed by RBI's rate cut and positive macro numbers.

Much of the fresh capital has been infused in the debt market.

The net inflow in the stock market stood at Rs 5,545 crore on October 1-23 while it read Rs 13,838 crore for debt, translating into Rs 19,383 crore (USD 2.98 billion), depository data showed.

This is the highest investment by FPIs since April, when they had poured in Rs 15,333 crore.

Should overseas investors continue with their positive momentum, they can breach the March figure Rs 20,723 crore as well, as there are still six more tradings in October.

Prior to October, FPIs pulled out over Rs 23,000 crore from the capital market (equities and debt) in the past two months on fears of an economic slowdown in China, which triggered a global sell-off.

They withdrew Rs 5,784 crore last month and another Rs 17,524 crore in August, the highest net outflow by FPIs in a single month since 1997. The segregated data prior to 1997 are not available.

Investor appetite returned after the Reserve Bank of India (RBI) Governor Raghuram Rajan last month pulled off a surprise by announcing a bigger-than-expected policy rate cut of 50 bps to 6.75 per cent -- the lowest in four and a half years -- to spur growth, said Gaurav Jain, Director, Hem Securities.

Furthermore, RBI's move of increasing the FPI limit in government securities has helped overseas investors park their money in the debt market.

Besides, positive macro parameters cheered, with industrial production growing at a nearly three-year high of 6.4 per cent in August, infrastructure output growing 2.6 per cent in the same month and fiscal deficit for April-August narrowing to 66.5 per cent of the full-year target.

Moreover, the rate cut by China's central bank will have a positive effect on inflow.

Since the beginning of the year, overseas investors have made a net investment of Rs 26,592 crore in equities and Rs 53,234 crore in debt market.