Foreign investors poured in over Rs 2,300 crore in the Indian capital markets in July, after pulling out funds for three months in a row, largely due to expectations of a lower trade deficit following a correction in crude oil prices.
The latest inflow comes after investors had taken out over Rs 61,000 crore from the capital markets (equity and debt) during the April-June period. Prior to that, FPIs had invested Rs 2,662 crore in March.
According to the latest depository data, foreign portfolio investors pumped in a net sum of Rs 2,264 crore in equities in July, Rs 43 crore in the debt market, and withdrew Rs 43 crore from hybrid investments.
“The inflows were more in line with what has been happening around in the world, but we can’t attribute anything specific except that correction in crude prices could actually lead to lower trade deficit and (ease) the pressure on the currency,” said R Sreesankar, head of institutional equities at Prabhudas Lilladher.
Susmit Patodia, head of sales at Motilal Oswal Institutional Equities, said FPIs returning back to India in July is a ‘significant positive’, considering it coincides with slowing down of domestic flows.
India has underperformed the emerging market index from the beginning of 2015 to June 2018 by 400 basis points. This underperformance served as a good foundation for investors to come back. Interestingly, in the last 10 years, FPIs in India have never pulled out material capital for more than three months in a row. The July inflow comes right on cue on thatSusmit Patodia, Head-Sales, Motilal Oswal Institutional Equities
Overall, so far this year, FPIs have withdrawn nearly Rs 4,100 crore from equities and over Rs 38,000 crore from the debt markets.
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