Foreign Portfolio Investors (FPIs) have so far withdrawn Rs 476 crore from Indian markets on a net basis in September, reflecting a cautious stance by participants amid fears of a resurgence of coronavirus cases in Europe and other countries.
According to depository data, FPI has withdrawn Rs 4,016 crore from equity and invested a net amount of Rs 3,540 crore in debt instruments during September 1-25 – a net outflow of Rs 476 crore.
FPIs remained net buyers for three consecutive months – June-August.
He invested Rs 46,532 crore in August, Rs 3,301 crore in July and Rs 24,053 crore in June.
Himanshu Srivastava’s aide said, “There are increased concerns over fears of renewed coronavirus cases in Europe and other countries and new lockouts in infected countries. This will help FPIs to take a cautious approach.” Director – Manager Research, Morningstar India.
Furthermore, the growing Kovid-19 case in India and the challenges facing the Indian economy also do not arouse confidence.
Srivastava said that given the buoyancy in the equity markets over the past few months and the appreciation in the Indian rupee against the greenback, FPIs would have found an opportune time to book the gains due to uncertainty.
Harsh Jain, co-founder and COO of the grove, said, “The high liquidity for printing of money leads to a lot of money flow into the system, which also results in an accelerated ballooning of various assets. This leads to quick investment and quick withdrawal from various assets. We have seen similar activities in Equity, Treasury, Gold and even Silver in the last few months. Jain said that in such a liquidity world, there will be such a big fall and market ascent for some more time.
Regarding investment in the debt segment, Jain said that the revival of interest in debt is a recent change that had been missing for almost six months.
Citing the reasons for investing in the bond market, Srivastava said that after the aggressive buying of bonds by the US Federal Reserve, yields have declined there. This could be one of the reasons for FPIs to seek other lucrative investment destinations such as the Indian debt markets, which could potentially offer better returns.
Commenting on the future of FPI inflows, Jain said that the major events to look forward to are the US election results and US-China relations as both these factors have been a major driver behind the market move in the past year and investors have both ends. But favorable indications will be required to be more certain about their investment plans going forward.
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