FPIs remain bullish on equities; pump in Rs 2,500 cr in May

Continuing with their bullish stance on India for the third month, foreign investors poured in more than Rs 2,500 crore in stock markets last month on forecast of above-normal monsoon this year.

In stocks, FPIs had invested a staggering Rs 8,416 crore in April and Rs 21,143 crore in March.

FPIs turned net buyers of equities in March after pulling out a massive Rs 41,661 crore from the market in the previous four months (November to February).

This year so far, FPIs have invested Rs 16,420 crore in equities.

Market experts attributed the inflows in last month to a positive update about an above-normal monsoon this year, which is seen to rub off on the overall consumer demand, brightened economic prospects. Besides, the statement made by US Federal Reserve has a positive impact on investors' sentiment.

US Fed chief Janet Yellen, last month, said the central bank may raise rates "in coming months" as the economy picked up as expected and jobs continued to be generated.

However, the inflow in May has slowed down compared to the preceding two months (March-April) mainly due to amended Indo-Mauritius tax treaty.

According to the data available with depositories, Foreign Portfolio Investors (FPIs) invested Rs 2,543 crore in equities last month. Moreover, they also put in Rs 966 crore in the first week of June.

However, FPIs withdrew Rs 4,409 crore from the debt markets last month.

Capital inflows by FPIs are often referred to as hot money due to their unpredictability, although the funds continue to remain one of the key drivers of the stock market.