Foreign Portfolio Investments remain positive on Indian markets

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The Foreign Portfolio Investments (FPIs) are positive in Indian Markets and the amount invested so far as of August 2020 is Rs. 41330 Crore. Himanshu Srivastava, Associate Director-Research Manager, Morningstar India, says that excess liquidity has been available on the global markets with several major central banks pursuing aggressive stimulus steps to counter the coronavirus pandemic and to help their declining economies.

In August, overseas investors put Rs 41,330 crore on a net basis in Indian markets so far as the excess liquidity in global markets finds its way into emerging markets like India. Global portfolio investors (FPIs) pumped into equities in Rs 40,262 crore and Rs 1,068 crore in the debt segment between August 3-21 according to the depository’s details. Before this, FPIs were net buyers for two consecutive months. In July they spent Rs 3,301 crore, and net Rs 24,053 crore in June.

Himanshu Srivastava said, the US is actively printing money too and the surplus liquidity makes its way into India as well as potentially other emerging markets. On the domestic front the positive sign is that opening up of the economy and the resumption of business activities. Also, Indian equities continue to be appreciated attractively, thus attracting FPI Srivastava’s attention, said FPIs have concentrated on emerging markets such as India as these markets have performed well and offer strong potential to generate better returns.The existence of liquidity surpluses in the global financial system will ensure that India continues to receive its investment share

Harsh Jain, co-founder, and chief executive at Groww said, after investments in blue-chip stocks, FPIs are now starting to pick mid-cap and small-cap stocks. Despite economic uncertainties due to the pandemic, FPIs are either going towards more stable gold or blue-chip stocks with greater capacity to cope with difficult times. Now, almost four months after the lockdowns started, we have a clearer image of the economy that has turned out to be much better than expected, he said. Likewise, many FPIs start making selective picks in the mid- and small-cap space as new opportunities arise.

According to executive vice president, Rusmik Oza, head of fundamental research at Kotak SecuritiesNifty-50 traded above the 11,000 marks owing to strong FPI flows and the active participation of local investors through direct equities. Barring India and Brazil, FPIs have been net sellers this week and month so far in most other emerging markets.

Harsh Jain added that the US elections and their outcome could play a major role in determining how the US economy moves which in turn affect India’s FPI investments.

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