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FPIs turn net buyers in June qtr; invest $4 bn in Indian equities

New Delhi: After pulling out massive funds in March quarter, foreign investors pumped in nearly $4 billion in Indian equities in the three months ended June on attractive valuations, lifting of lockdown curbs and the government's efforts to kickstart economic activity, says a Morningstar report.

Besides, foreign portfolio investors' (FPIs) assets in Indian equities too surged after a sharp fall in the previous quarter. The value of their investments in Indian stocks climbed significantly during the quarter ended June 2020.

This was largely on the back of robust net FPI inflows, coupled with a strong recovery in the country's equity markets.

As of the quarter ended June, the value of FPI investments in Indian equities stood at around $344 billion, which is considerably higher than the $281 billion registered in the preceding quarter, a spike of almost 23 per cent.

"During the quarter ended June, FPIs were net buyers in the Indian equity markets to the tune of $3.91 billion, which was in sharp contrast to the net outflow of $6.38 billion recorded in the previous quarter," according to the Morningstar report.

FPIs started the quarter on a sombre note as they were net sellers to the tune of $903 million in April. They made a comeback in the subsequent months of May and June as they pumped net assets worth $1.93 billion and $2.89 billion, respectively, into the Indian equity markets.

After an exodus of foreign investments to the tune of $8.4 billion in the month of March, the net flows stabilised somewhat in April. Although such investors continued with their cautious stance and were net sellers through the month, the amount of net outflow came down significantly.

"What contained the pace of net outflow were the measures announced by the government and the RBI periodically to revitalise the sagging economy -- and India performed better in containing the aggressive spread of COVID-19," the report read. FPIs, however, turned net buyers in the Indian equity markets from the month of May.

This could be attributed to the attractive valuation of the Indian equities after the sharp correction during the first quarter of calendar year 2020 and significant depreciation of the Indian rupee against USD, which provided them a rather good entry point.

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