FPI inflows surpass Rs 20,000 crore in September, at 11-month high

Foreign investors pumped in more than Rs 20,000 crore into the capital market in September, making it the highest net inflow in 11 months.

This also marks the third consecutive month of positive inflows (equity and debt).

The trend is likely to continue in coming weeks as regulator Securities and Exchange Board of India (Sebi) has decided to offer direct entry to well-regulated foreign investors for investing in corporate bonds, say experts.

They attributed the latest flurry of capital to factors such as sound progress in rollout of goods and services tax (GST), better corporate earnings and the US Federal Reserve's decision not to lift interest rates.

Sentiment turned better after the current account deficit (CAD) narrowed sharply to just $300 million (nearly Rs 1,995.83 crore), or 0.1% of gross domestic product (GDP), in the June quarter and domestic passenger vehicle sales grew for the 14th straight month in August, they added.

According to depositors' data, net investment by Foreign Portfolio Investors (FPIs) stood at Rs 10,443 crore in equities last month while the same for debt was Rs 9,789 crore, taking the total inflow to Rs 20,233 crore (nearly $3 billion).

This was the highest net inflow in capital markets since October 2015 when FPIs had infused Rs 22,350 crore.

The latest inflow has taken FPI investment tally in equities to Rs 51,293 crore in 2016 while the same for the debt market stands at Rs 2,441 crore, resulting in a net inflow of Rs 53,734 crore.