FPIs stay bullish on India, pump in $2 billion in April

Building on their buying momentum, foreign investors have poured close to USD 2 billion into capital markets so far in April, driven by hopes of a good monsoon and positive macroeconomic data.

It comes following a staggering inflow of Rs 19,967 crore in the capital markets -- both equities and debt -- last month.

FPIs 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, so far this year, FPIs have invested Rs 11,229 crore in equities while withdrawing Rs 1,121 crore in the debt market, resulting in a net inflow of Rs 10,107 crore.

Market experts attributed the huge inflow this month to the rate cut by RBI in its first monetary policy meet of 2016-17 on April 5.

RBI had reduced the short-term lending rate by 0.25 per cent to an over 5-year low of 6.5 per cent.

Besides, investor sentiment has improved further following positive macroeconomic data, including a cooling inflation and a forecast of an above-normal monsoon this year, igniting hopes of a higher growth and more policy easing by RBI, experts added.

According to data available with depositories, foreign portfolio investors (FPIs) invested Rs 6,734 crore in equities this month till April 22 while it stood at Rs 6,236 crore for the debt market, leading to a total inflow of Rs 12,970 crore (USD 1.95 billion).

"Following the recent rate cut by RBI, bond prices have rallied (prices move inversely to rate), which has led to inflows from FPIs in anticipation of further price appreciation in future," SAS Online Chief Operating Officer (COO) Siddhant Jain said.

"Also, the recent hike by capital markets regulator Sebi in the FPI investment limit for government debt will lead to more FPI inflows."