Indian market turns attractive to FPIs

PTI New Delhi | Updated on September 20, 2020 Published on September 20, 2020

Overseas investors have remained net buyers for three consecutive months

Foreign portfolio investors (FPIs) have put in Rs 3,944 crore so far on a net basis in domestic markets in September, with participants seem heading to “attractive” investment destinations like India for potential better returns.

Overseas investors bought equities worth a net Rs 1,766 crore and put in Rs 2,178 crore in the debt segment between September 1 and 18, depositories data showed. This translated into a total net investment of Rs 3,944 crore during the period under review.

Prior to this month, FPIs remained net buyers for three consecutive months. They had invested Rs 46,532 crore in August, Rs 3,301 crore in July and Rs 24,053 crore in June on net basis. “This could be attributed to the excess liquidity, which is available in the global markets, making its way into Indian equities,” Himanshu Srivastava, associate director - manager research, Morningstar India, said.

Also, the rebalancing of FTSE’s Global Equity Index Asia Pacific ex Japan and China could have also attracted flows, he added.

Regarding investment in the debt segment, Srivastava said that amid aggressive bond buying by the US Federal Reserve, the yields there have come down and this could be one of the reasons for FPIs to look for other attractive investment destinations like Indian debt markets, which could potentially offer better returns.

Attractive valuations

Rusmik Oza, executive vice president, head of fundamental research at Kotak Securities, said, “The investment in Indian markets during the period under review came even as FPIs remained consistent sellers in emerging markets internationally on both weekly and monthly basis. FPI flows remained positive in developed markets like US and Europe.”

This has mostly been because the valuations of other emerging markets had reached unattractive levels while India’s valuations were still attractive in comparison, he said.

Harsh Jain, co-founder and COO at Groww, said, “The US Fed has indicated that it plans to keep the interest rates near zero for the foreseeable future while also printing money and this makes parking money in the US and other developed markets a poor proposition and makes emerging markets (like India) seem attractive.”

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Published on September 20, 2020
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