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FPIs hooked to debt market, total inflows this year hits $20 bn

Emerging market monetary policies have diverged as softer inflation lends a dovish tilt

Press Trust of India  |  New Delhi 


Foreign portfolio investors were buyers in the Indian for the seventh month in a row in August, taking their total investment to $20 billion so far this year.

In August, overseas investors pulled out $2 billion from stock while they pumped in $2.40 billion in debt.

The significant inflow in August follows a net inflow of Rs 1.16 lakh crore in the previous six months from February- July 2017. In January, FPIs withdrew more than Rs 2,300 crore from the

"FPIs turned sellers in both and In the market, they were sellers at $1.8 billion and in futures, they were sellers at $ 636 million. However, they remained buyers in the for the 7th month in a row with strong inflows of $ 2.4 billion in August," said in a research note.

According to the latest depository data, FPIs have put in a net sum of Rs 48,628.40 crore ($7.60 billion) in the equity space while they have ploughed in Rs 1,29,510.67 crore ($20.26 billion) in the debt segment, taking their total investments to Rs 1,78,139.07 crore ($27.86 billion).

Market analysts believe the fundamentals of remain strong as the twin deficits have "largely corrected". Inflation is expected to settle around the targeted 4 per cent, down from double digits a few years ago.

"Encouraged by this, portfolio inflows have surged by $24 billion this year, coupled with strong foreign direct investments," DBS said in a recent research note.

While other major central banks signal a slow policy normalisation path, emerging market monetary policies have diverged as softer inflation lends a dovish tilt.

"The resultant wide real rates have been a draw for foreign investors," it added.

First Published: Sun, September 03 2017. 12:57 IST