Foreign Investors Have Pumped Over $2.6 Billion In India’s Capital Markets In November So Far

Foreign investors have pumped over $2.6 billion in the country’s capital markets in November so far, propelled by government’s bank recapitalisation plan and surge in India’s ranking in the World Bank’s ease of doing business index.

Net FPI inflow in capital markets (equity and debt) stood at Rs 19,000 crore in October. Foreign portfolio investors (FPI) pulled out net Rs 10,000 crore in September.

According to depositories data, FPIs infused Rs 16,455 crore in equities and Rs 754 crore in the debt market during November 1-24, resulting in an inflow of Rs 17,209 crore ($2.65 billion).

The FPI inflow could be attributed to some of the positive developments in the recent times, including the bank recapitalisation plan which is expected enhance bank lending and propel economic growth, said Morningstar India’s senior analyst manager (research) Himanshu Srivastava.

“This (bank recapitalisation plan) is particularly seen as a positive step after the questions were raised from various quarters on the government’s ability to effectively implement economic reforms. Additionally, slight improvement in global sentiments and stable currency could have also turned the tide in India’s favour,” Srivastava said. India faring well in the World Bank’s ease of doing business index and a jump in core sector growth also worked as triggers for foreign investment, he added.

India gained 30 places in the World Bank’s ease of doing business index for 2018 to 100th among 190 nations. “This positive news provided a much-needed breather to FPIs, who were concerned about the short-term impact of demonetisation and GST on the domestic economy and sluggish pace of economic recovery,” Srivastava said.

Yet another positive piece of news has come from Moody’s Investor Services which upgraded its India rating by a notch to ‘Baa2’ from ‘Baa3’ with a stable outlook, citing improved economic growth prospects driven by government reforms.

On October 24, union finance minister Arun Jaitley announced the PSU bank recapitalisation plan of Rs 2.11 trillion, out of which Rs 1.35 trillion will come from recapitalisation bonds, and the rest from markets and budgetary support.

Overall, FPIs have invested Rs 53,800 crore in equities so far in 2017 and another Rs 1.46 trillion in debt markets. (PTI)