FPIs pour in $3 bn in stock markets
Overseas investors have pumped in over Rs 21,000 crore (over $3 billion) into Indian equity markets in March, after pulling out massive funds in the preceding four months. However, Foreign Portfolio Investors (FPIs) have pulled out Rs 1,476 crore in the debt markets during the period under review.
Market experts attributed the huge inflows to continued hopes that Reserve Bank of India (RBI) would bring down the monetary policy rate at its first policy meet of 2016-17 on April 5. Additionally, a lower retail inflation at 5.18 per cent in February provides more room for RBI to act, they added.
According to the data available with depositories, Foreign Portfolio Investors (FPIs) invested Rs 21,143 crore in equities last month, while they withdrew Rs 1,476 crore in the debt markets, leading to a net inflow of Rs 19,667 crore ($2.93 billion). Foreign Portfolio Investors have turned net buyers of equities in March after pulling out a massive Rs 41,661 crore from the market in the previous four months (November to February).
Overall, in 2015-16, Foreign Portfolio Investors have pulled out Rs 14,171 crore from equities and another Rs 4,004 crore debt taking the total to Rs 18,175 crore. This was the first outflow of overseas funds from Indian capital markets in seven years.
Capital inflows by FPIs are often referred to as hot money due to their unpredictability, although the funds continue to remain one of the key drivers of the stock market.
... can invest `14,000 crore more in government securities
Foreign Portfolio Investors (FPIs) will be able to invest an additional Rs 14,000 crore from Monday in various government securities, including those of the states. The cap has been now raised to Rs 2,00,500 crore from the current Rs 1,86,500 crore. The limits would be enhanced further by another Rs 13,500 crore from July 5 onwards. This follows decisions by RBI and Sebi late last month to allow greater foreign fund flows into the government securities, which are generally favoured by FPIs over the corporate bonds in India. FPIs can invest up to Rs 1,40,000 crore in central government debt from Rs 1,35,400 crore now, limits for long term FPIs (sovereign wealth funds, multilateral agencies, insurance funds, pension funds and foreign central banks) will be increased to Rs 50,000 crore from the existing Rs 44,100 crore. They can also invest up to Rs 10,500 crore in state development loans from current amount of Rs 7,000 crore. The incremental limit of Rs 5,900 crore for Long Term FPIs will be available for investment on tap with effect from tomorrow, while the separate additional limit of Rs 3,500 crore for State Development Loans (SDL) will also be available on tap. Any limit remaining unutilised by the long-term investors at the end of a half-year would be made available as additional limit to the investors in the open category for the following half-year.