FPIs infuse Rs 8,000 cr in equities in 2 weeks

Overseas investors are raising their bets on Indian market as they have pumped in Rs 8,000 crore into the domestic equities so far this month on continued hopes that the RBI would bring down the monetary policy rate.

However, they pulled out Rs 2,502 crore from the debt markets during the period under review. Foreign Portfolio Investors (FPIs) have turned net buyers of equities in March after pulling out a massive Rs 16,648 crore from the market in the previous two months. Inflows accelerated on expectations that Reserve Bank of India would reciprocate to the government's commitment to fiscal prudence with a rate cut sooner than later, market analysts said.

In addition, a sign of recovery in global market and the government retaining its deficit target for the next fiscal at 3.5 per cent of GDP in Budget 2016-17 have raised optimism among market participants, they added. According to the data available with depositories, FPIs invested Rs 7,860 crore in equities during March 1-11, while Rs 2,502 crore was withdrawn from the debt market in the same period, leading to a net inflow of Rs 5,358 crore ($794 million).

Prior to that, FPIs had pulled out Rs 11,126 crore from equities in January and Rs 5,521 crore in February on account of continuous fall in crude prices and fears of a global slowdown.

Capital inflows by FPIs are often referred to as hot money due to their unpredictability though the funds continue to remain one of the key drivers of the stock market.