FPIs pour in $2.4 bn into capital markets in July over smooth GST rollout

Overseas investors have pumped in $2.4 billion in the capital markets this month, enthused by trouble-free roll-out of GST and on hopes of better corporate earnings, taking the total to $25 billion so far this year.

The latest inflow follows net infusion of Rs 1.6 lakh crore in the previous five months (February-June) on several factors. In January, they had pulled out over Rs 3,496 crore.

Dinesh Rohira, Founder and CEO, 5nance.Com has attributed the latest inflow to stimulating Indian economy.

Besides, he said, investor sentiments remained upbeat due to the trouble-free roll-out of the Goods and Services Tax from July 1.

Investors expect blue-chip companies to post encouraging first quarter numbers in the coming days. On top of it, monsoon progress so far has been above-normal, said Anand James, Chief Market Strategist, Geojit Financial Services.

According to latest depository data, FPIs invested a net Rs 2,977 crore in equities during July 3-21, while they poured Rs 12,371 crore in the debt markets review, translating into a net inflow of Rs 15,348 crore ($2.4 billion).

With the latest inflow, total investment in the capital markets (equity and debt) has reached Rs 1.63 lakh crore ($25 billion) this year.

Rohira said however that the recent development on incoming global macro data indicates a sign of revival in some developed countries which is expected to pose a hurdle for Indian market as FPI may shift their investment avenue.

Further, the inflow from FPI is expected to remain subdued with depreciating US currency against the Indian rupee, he said.

However, Himanshu Srivastava, Senior Research Analyst - Manager Research, Morningstar Investment Adviser India, said that he does not expect any dramatic change in the FPI inflow trend over the next couple of months.

There are few areas which FPIs will focus on -- impact of GST on the economy in the short run; economic growth has not yet picked up, which is contrary to the expectation, and they would want to see signs of improvement in it.

"Also, US Federal Reserve has hiked rates so far three times and more rate hikes could see some money moving out of emerging markets. Rupee is also appreciating and with markets surging too, profit booking at regular intervals will also happen," he added.