Government plans new law to safeguard foreign investment, says report

The government is planning a new law to safeguard foreign investment by speeding up dispute resolution, aiming to attract more capital from overseas to boost stuttering domestic growth, two officials with direct knowledge of the matter told Reuters.
In a 40-page initial draft, finance ministry has proposed appointing a mediator and setting up fast-track courts to settle disputes between investors and the government, one of the sources said.

"The idea is to attract and promote foreign investment, but a major issue for investors is enforcement of contracts and speedy dispute resolution," said the official.
The draft proposal is aimed at diffusing investor mistrust around the sanctity of agreements, which has worsened recently after some state governments decided to review approved projects, or threatened to cancel contracts.
Both officials declined to be named as the proposal is not public, and is still being assessed by different ministries and regulators.
A spokesman for the finance ministry did not respond to a request for comment.
Foreign investors have highlighted the enforcement of contracts as one of their biggest concerns, said the second official, adding that improving on this front would also reduce litigation for the government.
While investors can still rely on the existing legal system to settle disputes, it often takes several years for cases to be decided or settled.
Investors previously had an option to take India to international arbitration courts under bilateral investment treaties (BITs) the government had agreed with dozens of nations. But, after suffering setbacks in overseas arbitration matters, India has allowed most of its treaties to lapse, giving investors little to fall back on in case of major disputes.
BITs are agreements between two countries that give foreign investors protections, and among other things, legal recourse via international arbitration in disputes with a government.
India is entangled in more than 20 such overseas arbitration cases - the most against any country - brought by companies including Vodafone, Deutsche Telekom and Nissan Motor Co for disputes over retrospective tax claims and breach of contracts.
If India loses these cases, brought before most of its BITs lapsed, it could end up paying billions of dollars in damages.
The government's thinking is that India may not need to sign investment treaties with other nations if the new law, which is modelled on a BIT, can give confidence to investors, said the first source. A domestic law, however, cannot be a substitute for a BIT as its scope cannot allow investors to take their case to international arbitration, the sources said.

FPIs remain net buyers in Dec; invest over Rs 2,600 cr in domestic mkts

Foreigninvestors remained net buyers in December by investing Rs 2,613 crore in the domestic markets, mainly due to expectation of a revival in corporate earning, quantitative easing by the US Fed and infusion of funds by central banks globally.
According to the depositories data, a net amount of Rs 6,301.96 crore was invested by foreign portfolio investors (FPI) into equities, while Rs 3,688.94 was pulled out of the debt segment.

This resulted into a total net investment of Rs 2,613.02 crore between Dec 2-27.
"Despite challenges on the economic front and policy roadblocks, FPIs continue to have faith in the Indian equity markets ...what has kept them hooked to the Indian equity markets is expectation of a revival in corporate earning in the coming quarter, quantitative easing by US Fed and infusion of funds by central banks globally," said Himanshu Srivastava, senior research analyst, manager research at Morningstar.
Barring January, July and August, FPIs have been net buyers for rest of the months in 2019. This year, they have invested a net sum of Rs 73,276.63 crore in the Indian markets (both equity and debt).
"In 2019, FPIs remained bullish on India on account of many factors including corporate tax rate cut, RERA, among others have helped in this regard. The valuations in the Indian stock markets were very high.
"Besides factors within India, international factors including lower interest rates in USA, near-zero interest rates in economies like Japan, and negative interest rates in parts of Europe are also driving investments into India," Harsh Jain, co-founder and COO, Groww said.
Regarding future course of FPI flows, Srivastava said there are few negative developments like recent political issues in India and re-emergence of trade war between US and China, which FPIs would be watchful of. While the government has taken several measures to revive the economy the results are yet to be seen.

CAA protests: Tourists cancel trips; industry may take hit, fear operators

Foreigntourist arrivals slowed down to under 3 per cent in the first 10 months of this year. The ongoing protests over the Citizenship Amendment Act, which have sometimes resulted in violence, could hurt growth further, fear tour operators. Foreign tourists are postponing their India holiday and there have been some cancellations as well, with trips to the North-East seeing the most adverse impact.
“Bookings have been slow this year. There has been one bad news after another, but little damage control from the government,” said Rajeev Kohli, former vice president of Indian Association of Tour Operators.
December is the busiest month for foreign tourist arrivals in the country. However, operators are bracing for a decline this month
. "We were anticipating 7-8 per cent growth in arrivals in December, but now we may actually see a degrowth of 2-3 per cent due to tourists deferring their India visit," said Subhash Goyal, chairman of Stic Travels. Trips to North Eastern states have been cancelled in view of ongoing protests and advisories from foreign governments.
Five countries — Russia, Canada, US, UK and Israel — have asked their citizens to exercise caution while visiting India, especially the North Eastern states. Canada has asked its citizens to avoid non- essential travel to Assam and its neighbouring states. "While we are assuring our overseas travel partners, tourism and external affairs ministries should engage with foreign governments to explain the actual situation on ground," Goyal said.
Over 8.5 million foreign tourists came to India between January-October, a growth of 2.7 per cent on a year-on-year basis. While arrivals in 2018 rose 5.2 per cent to 10.5 million, growth has slowed down in 2019.
Kohli believes the impact of countrywide protests on tourism would be short-term in nature. "There is no safety threat to tourists as such, and protests are confined to certain parts in each city," he said. Apart from working with airlines and hotels on refunds and rescheduling, tour operators are seeking better presence at international airports. "We are concerned about customer experience and are trying to assure guests through greater handholding and dedicated presence, right from arrival to departure. We have also asked authorities to allow us enhanced presence at key airports, so that the customers are adequately supported at all times," said Rakshit Desai, managing director of FCM Travel Solutions.
"We are in the middle of the high season and hoping for the situation to calm down. We have not received any cancellations," said Homa Mistry, CEO, Trail Blazer Tours India.

FPIs remain net buyers for third straight month; invest Rs 22,872 cr in Nov

Foreigninvestors remained net buyers in the Indian capital market for the third straight month in November, putting in Rs 22,872 crore on net basis during the month, according to depositories data.
Analysts said expectations of a trade deal between the US and China, and more relief measures as well as disinvestment drive by the government among other factors helped keep FPIs stuck on the capital markets.

A net sum of Rs 25,230 crore was flowed into equities by FPIs in November, the data showed. However, they pulled out Rs 2,358.2 crore from the debt segment, translating into a total net investment of Rs 22,871.8 crore by FPIs in November.
FPIs had invested a net sum of Rs 16,037.6 crore in October and Rs 6,557.8 crore in September.
"FPIs have been consistent net buyers in November mainly due to expectations of a trade deal between US-China, relief measures along with disinvestment drive by the government, hopes for a scrappage policy and a few others," said Umesh Mehta, head of research at Samco Securities.
Besides, "tax reforms announced in September 2019 will now to be legislated. This takes away ambiguities on implementation of these reforms," said Pranay Bhatia, partner and leader tax and regulatory services at BDO India.
The tax reforms and positive approach will go a long way in reducing the overall taxes for businesses, leading to greater liquidity and economic growth, he added.
Also, "the improving rural consumption numbers along with expectations of better results by companies is aiding this inflow. The midcap space has a lot of attractive valuations at the moment," Harsh Jain said.
However, going forward, "there is some nervousness surrounding the upcoming GDP numbers. Many don't have high hopes from it. A lower than expected GDP in this quarter might upset some FPIs for a short while," Jain added.

FPIs pull out over Rs 6,200 cr in Oct so far as global recession fears loom

Foreign portfolio investors withdrew over Rs 6,200 crore from Indian capital markets in the first two weeks of October, as global recession fears and trade war concerns weighed on sentiments.
Foreign investors pulled out a net amount of Rs 4,955.2 crore from the equities and Rs 1,261.9 from the debt segment, taking the total net withdrawal to Rs 6,217.1 crore during October 1-11, as per latest depositories data.

Overseas investors were net buyers in the preceding month and had infused a net sum of Rs 6,557.8 crore in the domestic capital markets (both equities and debt), according to the data.
The foreign portfolio investors (FPI) in October went back in "hibernation mode" after remaining net sellers in September when the inflows were driven by slew of economic reforms announced by the government, said Himanshu Srivastava, senior analyst manager research at Morningstar Investment.
"However, things have remained muted after that, as FPIs have turned risk-averse with fears of global recession and trade war gaining momentum. Moreover, the Indian economy has also been facing significant headwinds and has failed to pick pace so far. More recently, world bodies like IMF, ADB and Moody's have cut growth forecasts of India, which dented sentiments further," Srivastava added.
Harsh Jain, co-founder and COO at Groww said: "The new FPI/FDI classification might affect the mood of foreign investors for some time. The reduced GDP forecast by Moody's and other institutions seems to be affecting the foreign investors also. India's troubled banking and financial sector is definitely making investors jittery".
Arun Mantri, technical and derivative analyst at Karvy Stock Broking, said the FPIs have been net sellers so far in October "tracking global headwinds".
"This has occurred despite the government's major announcements to revive animal spirits. The major reason behind the selling is the rising fear is a global recession, and weak investor sentiment due to the ongoing trade war between US and China," he added.
For the future course of FPI flows, he said, in the short to medium term, FPIs flows will depend on the corporate earnings, global trade developments and government actions to curb the slowdown in the economy.

Foreign investors pull out Rs 5,920 cr in August despite surcharge rollback

Foreign investors pulled out a net amount of Rs 5,920 crore from the Indian capital markets in August even as the government rolled back enhanced surcharge on FPIs last week.
The withdrawal from the capital markets (both equity and debt) in August is "contrary to the expectation" since the Centre last week announced revocation of enhanced super-rich tax on foreign and domestic equity investors imposed in the Budget, said Himanshu Srivastava, senior analyst manager research at Morningstar.

According to the latest depositories data, foreign portfolio investors (FPIs) withdrew a net amount of Rs 17,592.28 crore from equities and pumped in a net sum of Rs 11,672.26 crore in the debt segment, translating into a total net outflow of Rs 5,920.02 crore during August 1 - 30.
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In July, overseas investors had pulled out a net amount of Rs 2,985.88 crore from the capital markets.
Prior to the announcement of enhanced super-rich tax in the Union Budget for 2019-20 in July, FPIs were net buyers for five consecutive months.
FPIs had infused a net Rs 10,384.54 crore in June, Rs 9,031.15 crore in May, Rs 16,093 crore in April, Rs 45,981 crore in March and Rs 11,182 crore in February into the Indian capital markets.
"Concerns over slowing domestic economy, volatility in the global markets and increased fears of global recession due to escalating trade war tension between US and China overshadowed the positive move of withdrawal of surcharge," Srivastava added.

Foreign investors pull out Rs 8,319 cr in Aug amid trade worries, FPI tax

Foreign investors pulled out Rs 8,319 crore on a net basis from capital markets in the first half of August, continuing their selling spree in the Indian market amid uncertainty over FPI tax and global trade worries.
According to the depository data, foreign portfolio investors (FPIs) sold equities worth Rs 10,416.25 crore on a net basis during August 1-16 period.

FPIs, however, invested a net Rs 2,096.38 crore in the debt securities during the period.
So far in August, FPIs have been net sellers for nine out of 10 trading sessions, indicating "extreme negative sentiment", Himanshu Srivastava, senior analyst manager research at Morningstar said.
In July, FPIs had withdrawn a net sum of Rs 2,985.88 crore from the Indian capital markets (both equity and debt).
"Prevailing uncertainty over the higher tax on FPI has negatively impacted foreign investors. They have been exiting Indian equities ever since the higher surcharge, or super rich', tax was introduced in the budget announced on July 5th," Srivastava added.
Besides, a mix of unconducive domestic and global factors have also contributed towards this exodus of foreign funds from the Indian equity markets in July as well as in August. While there has been a marked slowdown in India's economic activity, a sub-par monsoon and weak earning season have made matters worse.
Experts opined that the ongoing tension between the US and Iran and the continued trade war between the US and China have also impacted the investor sentiment.

FPIs remain net buyers in July so far, infuse Rs 3,551 crore in markets

Foreign investors have remained net buyers in the Indian capital markets this month so far, even as the equity segment saw robust outflows post the Budget.
According to the latest depositories data, foreign portfolio investors (FPIs) withdrew a net sum of Rs 4,953.77 crore from equities during July 1-12, but poured in a net Rs 8,504.78 crore into the debt market, translating into a cumulative net investment of Rs 3,551.01 crore.

Overseas investors pulled out money from the equity markets for five of the six sessions following the Budget, which was presented on July 5.
According to experts, the proposal in the Union Budget to hike surcharge on income tax for wealthy individuals, including foreign funds which are structured as trusts and association of persons (AoPs), dented FPIs' enthusiasm for Indian equities and may lead to re-evaluation of their exposure to the domestic stock market.
FPIs have been net buyers for the past five consecutive months, infusing a net Rs 10,384.54 crore in June, Rs 9,031.15 crore in May, Rs 16,093 crore in April, Rs 45,981 crore in March and Rs 11,182 crore in February into the Indian capital markets (both equity and debt).
"During the Budget, the government announced various measures to boost foreign flows and FDI in Indian markets such as rationalising and simplifying the KYC form for FPIs, allowing FPI investments in debt securities issued by NBFCs and hiking statutory limit of foreign investments in some companies.
"While these were broadly viewed as positive steps, the proposal to hike surcharge on income tax for wealthy individuals, including foreign funds which are structured as trust and AoPs, didn't go down well with the markets," said Himanshu Srivastava, Senior Analyst Manager Research at Morningstar Investment.
Next few days would be crucial to understand how FPIs act in respect to this changed environment, he added.
V K Vijayakumar, chief investment strategist at Geojit Financial Services, said, "The major drag on Indian market now is the faltering GDP growth and tepid earnings growth. If macro indicators reflect an improving economy, FPI flows can be expected to continue. Otherwise FPIs would be less enthusiastic to pour more money into Indian markets.

FPIs pull nearly Rs 6,000 cr in Jan on global headwinds, upcoming elections

Foreign investors have pulled out close to Rs 6,000 crore so far from the Indian stock markets in January and experts believe this trend will continue in the coming months as well.
This comes following a collective net inflow of Rs 8,584 crore in the equity markets by Foreign Portfolio Investors (FPIs) during November and December 2017. Prior to that, they had pulled out a massive Rs 28,900 crore in October.

According to data available with the depositories, FPIs withdrew a net amount of Rs 5,880 crore during January 1-25.
However, they invested a net Rs 163 crore in the country's debt markets during the period under review.
"Investors are taking a cautious approach given their focus on global headwinds and upcoming general election," said Vinod Nair, Head of Research, Geojit Financial Services Ltd.
It has not been a good start of the year with regards to FPI flows and clearly they are continuing with their cautious or wait and watch stance towards India, which they have been maintaining for a long time, said Himanshu Srivastava, Senior Analyst Manager Research at Morningstar Investment Adviser India.
He further said that the focus would continue to be on the upcoming Union Budget, progress on the economic front and the general election.
Other factors such as movement in crude prices and currency, which would have a bearing on the country's macro-environment, and worries over global trade war will continue to guide the direction of FPI flows, Srivastava added.
"In addition, the concerns surrounding the global growth outlook as well as the stance of US Fed towards interest rates will also play a significant role in deciding the direction of foreign flows," he noted.
Echoing similar views, Alok Agarwala Senior VP and Head Investment Analatycs at Bajaj Capital, said FPI flows would continue to be volatile in the coming months.
"The outflows could continue further with US interest rate hikes, tightening global liquidity condition and escalating trade disputes. The domestic macroeconomic concerns viz, weakness in currency, movement of crude oil prices, trade deficit would also weigh in on inflows," he said.
"As a base case scenario, we could expect overall net flows to turn marginally positive in case external conditions improve in the next few months as one of the factors -- oil prices corrected sharply in last few months," he added.

FPIs infuse Rs 40 bn in Dec on strengthening rupee, easing crude prices

Foreign investors have pumped in close to Rs 40 billion in the Indian capital markets this month so far on strengthening rupee and easing global crude oil prices.
This comes following a 10-month high net inflow of over Rs 122.66 billion in the capital markets (equity and debt) by Foreign Portfolio Investors (FPIs) in November.

According to data available with the depositories, FPIs infused a net amount of Rs 13.32 billion in equities and Rs 25.52 billion in the debt markets, taking the total to Rs 38.84 billion during December 3-21.

Marketmen attributed the inflow to persistent fall in crude oil prices, which dropped to over 15-month lows, and strengthening rupee against the dollar.
However, till December 7, FPIs were net sellers in the equity market, pulling out funds to the tune of Rs 3.83 billion. However, they had put in Rs 27.44 billion in the debt markets during the period under review.
"The sell-off was triggered on December 6, when FPIs sold net assets worth Rs 361 crore in a single day. This could be largely attributed to the weakness in the global markets due to the arrest of a high-profile Chinese executive which led to a sharp fall in the stock markets globally," said Himanshu Srivastava, Senior Analyst Manager Research, Morningstar Investment Adviser India.
"Investors fear that the relationship between the world's two biggest economies -- US and China -- could deteriorate following the arrest and hurt economic growth. Consequently, they chose to adopt a cautious stance and shun risky assets, such as their investments in emerging markets like India, which are more susceptible to weak global cues," he added.
ALSO READ: FPI inflows hit 10-month high of Rs 122.6 bn on softer crude, rupee gains
The sell-off by FPIs was triggered after Chinese telecom giant Huawei's CFO Meng Wanzhou, who is also the company founder's daughter, was arrested in Canada for extradition to the US for suspected Iran sanctions violations.
FPIs have pulled out over Rs 842 billion from the capital markets so far this year. This includes close to Rs 340 billion from equities and Rs 502 billion from the debt market.

FPIs pull out nearly Rs 4 bn in 5 sessions on global cues after Huawei case

Foreign investors have pulled out close to Rs 4 billion from the Indian stock market in the last five trading sessions amid weakness in global equities due to the arrest of a high-profile Chinese executive.
This comes following a net inflow of over Rs 69 billion in the equity market by Foreign Portfolio Investors (FPIs) on easing crude oil prices and a strengthening rupee.

According to depositories, FPIs withdrew a net amount of Rs 3.83 billion from equities from December 3-7.
However, they put in Rs 27.44 billion in the debt markets during the period under review.
After making a spirited comeback in November, FPIs have once again turned net sellers in the Indian equity markets in the month of December.
"In fact, the sell-off was triggered on Thursday December 6, when FPIs sold net assets worth Rs 3.61 billion in a single day. This could be largely attributed to the weakness in the global markets due to the arrest of a high-profile Chinese executive which led to a sharp fall in the stock markets globally," said Himanshu Srivastava, Senior Analyst Manager Research, Morningstar Investment Adviser India.
"Investors fear that the relationship between the world's two biggest economies -- US and China -- could deteriorate following the arrest and hurt economic growth. Consequently, they chose to adopt a cautious stance and shun risky assets, such as their investments in emerging markets like India, which are more susceptible to weak global cues," he added.
The sell-off by FPIs was triggered after Chinese telecom giant Huawei's CFO Meng Wanzhou, who is also the company founder's daughter, was arrested in Canada for extradition to the US for suspected Iran sanctions violations.
FPIs have pulled out over Rs 856 billion from the capital markets so far this year. This includes more than Rs 356 billion from equities and Rs 500 billion from the debt market.

Amid falling rupee, trade war, FPIs have pulled out Rs 356 bn in Oct so far

Foreign investors have pulled out a massive Rs 356 billion (about $5 billion) from the Indian capital markets this month on concerns over rupee depreciation, global trade war tiff and rising crude prices.
The latest outflow is higher than Rs 210 billion worth of net withdrawals seen in entire September. Prior to that, overseas investors had invested a net sum of Rs 74 billion in the capital markets (both equity and debt) in July-August.

According to the latest depository data, foreign portfolio investors (FPIs) sold equities to the tune of Rs 241.86 billion during October 1-26 and bonds worth Rs 114.07 billion, taking the total to Rs 355.93 billion ($4.8 billion).
FPIs have been net sellers almost throughout this year barring a couple of months such as January, March, July and August. In these four months, overseas investors have put funds totalling over Rs 320 billion. However, experts believe in withdrawal of funds in October has shaken the market.
So far this year, FPIs have pulled out a total of Rs 970 billion from the capital markets. This includes over Rs 370 billion from equities and close to Rs 600 billion from the debt markets.
ALSO READ: FPIs dump banks, mutual funds lap up metals in September quarter
According to Rahul Mishra, AVP (Derivatives), Emkay Global Financial Services, macro issues like liquidity crunch created post IL&FS default, Indian currency move and volatility in crude oil price have kept the investors at bay.
"The continued selling pressure from FPI is needed to be looked from the angle of what is happening globally. From the Indian context, the current issues faced by the NBFC (non-banking finance company) is not helping either," R Sreesankar Co-head equities at Prabhudas Lilladher.
Going ahead, market experts said volatility is likely to continue for other reasons too such as US sanctions on Iran, which take effect next month, as Iran is a major source of crude oil for India. Besides, India has some key state elections coming up, which could provide cues to FPIs for next year's central elections.

Foreign investors pull out Rs 56 bn in Sept on rupee fall, oil price rise

Foreign investors have pulled out a massive Rs 56 billion from the Indian capital markets in the last five trading sessions, after putting in money during the previous two months, on unabated fall in rupee and rise in crude oil prices.
The latest outflow comes following a net infusion of close to Rs 52 billion in the capital markets, both equity and debt, last month and Rs 23 billion in August. Prior to that, overseas investors had pulled out over Rs 610 billion during April-June.

According to the latest depository data, foreign portfolio investors (FPIs) withdrew a net sum of Rs 10.21 billion from equities during September 3-7 and a net amount of Rs 46.28 billion from the debt market, taking the total to Rs 56.49 billion.
Market analysts attributed the latest outflow to the fall in the rupee, rise in crude oil prices, concerns over markets regulator Sebi's FPI circular and weakness in global markets.
Foreign investors lobby group Asset Managers Roundtable of India (AMRI) last week said that $75 billion will flow out of India if Sebi implements its proposed norms on KYC and beneficial ownership. However, the markets regulator brushed aside the concerns and termed the claim as "preposterous and highly irresponsible".
ALSO READ: Weak rupee could cost India $9.5 billion more to repay foreign debt
According to Himanshu Srivastava, Senior Research Analyst at Morningstar, there is a fair bit of uncertainty and cautiousness among FPIs at the moment.
"The focus of FPIs would be on their sustainability over the long-term," he said.
Overall, so far this year, FPIs have pulled out over Rs 34 billion from equities and more than Rs 426 billion from the debt markets.

After pulling out funds in June, FPIs net inflow at Rs 18 bn in July so far

Foreign investors have put in over Rs 18 billion in the Indian equity markets so far in July after pulling out massive funds in the preceding month.
The latest inflow comes after such investors had taken out more than Rs 200 billion from the stock market during April-June.

According to the latest depository data, foreign portfolio investors (FPIs) pumped in a net sum of Rs 18.48 billion in equities during July 2-27. However, they withdrew Rs 4.82 billion from the debt market during the period under review.
"It would be too early to celebrate given the factors that influence FPI flows do not look promising. Also, the recent buying by FPIs could be a part of their short term tactical play as the quantum of net flows so far does not display conviction," said Himanshu Srivastava, senior research analyst, manager research at Morningstar. The concerns continue to persist over crude oil prices, high retail inflation, depreciating rupee against the US dollar and fear of global trade war, he added.
"The money, which is coming to the market is now from savings or those foreign investors who wish to or have entered the market for the first time," said Tushar Goyal, business development officer at Meri Punji IMF Ltd.
Overall, so far this year, FPIs have pulled out nearly Rs 46 billion in equities, while they withdrew close to Rs 420 billion from the debt markets.

FPIs selling spree continues; withdraw Rs 12 bn from markets in July so far

Continuing their selling spree, foreign investors have pulled out nearly Rs 12 billion from the debt markets in the first two weeks of the month on higher fuel prices and possibilities of rate hike by the US Federal Reserve.
The latest sell-off comes after foreign portfolio investors (FPIs) withdrew an amount close to Rs 500 billion from the debt markets in last five months (February to July). Prior to that, overseas investors had infused over Rs 85 billion in January.

As per the data compiled by depositories, net outflow in the debt markets stood at Rs 11.9 billion during July 2-23.
"Selling by FIIs in the Indian debt markets could be attributed to higher fuel prices which fans fear that the inflation may stoke further. This in turn could widen the country's current account deficit thus putting pressure on the rupee which has already depreciated almost 8 per cent since the end of January this year," said Himanshu Srivastava, senior research analyst, manager research at Morningstar.
"Additionally, tightening of policy back in the US also does not augur well for the Indian debt markets. This trend may continue given there are expectations that the US Fed may hike rates further," he added.
ALSO READ: Sovereign funds cut India investments; share of FPI drops in recent years
In contrast, foreign portfolio investors have put in Rs 5.92 billion in equities during the period under review.
After being on a selling spree for three consecutive months where FPIs pulled out net assets worth over Rs 200 billion (between April-June) from the equity markets, the month of July with net inflow of Rs 5.52 billion may appear like a breather.
"It would be too early to celebrate given the factors that influence FPI flows does not look promising. Also, the recent buying by FPIs could be a part of their short-term tactical play as the quantum of net inflows so far does not display conviction," Srivastava added.
Additionally, the concerns continue to persist over higher crude oil prices; increasing retail inflation; depreciating rupee against the US dollar; high chances of further rate hikes by the US Fed and fear of global trade war, he added.

After months of hefty pullout, FPIs infuse Rs 30 bn in just five days

Foreign investors have pumped in over Rs 30 billion in the Indian capital markets in the last five trading sessions after pulling out hefty funds during April-June.
The recent infusion comes following a net outflow of more than Rs 610 billion in the last three months. Prior to that, they had poured in Rs 26.62 billion in March.

According to depositories data, foreign portfolio investors (FPIs) pumped in Rs 22.35 billion in the equity markets during July 2-6. Besides, they put in Rs 8.92 billion in the debt market, taking the total to Rs 31.27 billion.
"Equity markets are witnessing some value buying after a sharp correction in mid and small cap indices that have corrected by almost 20 per cent in 2018. The recent interest among FPIs is basically bottom fishing in beaten down stocks," said Rajeev Srivastava, head of retail broking at Reliance Securities.
Overall, it has been a bumpy ride this year as far as FPI flows are concerned and the fluctuations in net flows at times have been massive, thus making the entire proposition unpredictable.
So far this year, overseas investors have withdrawn Rs 447.37 billion from the capital markets. This includes Rs 405.41 billion from the debt and remaining Rs 41.96 billion from equities.
ALSO READ: Great FPI flight: Investors pull out Rs 480 bn in 2018; highest in 10 years
In January, FPIs invested Rs 222.72 billion in the capital market. However, in February they were net sellers to the tune of Rs 116.74 billion. The following month, they again turned positive and put in Rs 26.62 billion in March.
However, they took bearish stance in April and the momentum continued till June. During these three months, overseas investors withdrew over Rs 610 billion.
"Undoubtedly, this year has been extremely unfavourable from FPI flow perspective.
"This could be attributed to multiple factors. There has been significant outflow from India focussed offshore funds and exchange traded funds (ETFs) which contributes a significant portion towards FPI flow," Morningstar India Senior Analyst Manager Research Himanshu Srivastava said.
Moreover, he said India is currently fraught with higher crude prices and depreciating Indian currency.

FPI outflow hits 18-month high at Rs 297 bn on surge in crude prices

Foreign investors pulled out a massive Rs 297.14 billion from the capital markets in May, making it the biggest outflow in 18 months, primarily due to a surge in global crude prices.
This comes following an outflow of Rs 155.61 billion from the capital markets (equity and debt) in April. Prior to that, foreign investors had pumped in Rs 26.62 billion in March.

According to the latest depository data, foreign portfolio investors (FPIs) withdrew a net sum of Rs 100.60 billion from equities and another Rs 196.54 billion from the debt market in May, taking the total to Rs 297.14 billion (USD 4.4 billion).
This is the steepest outflow from the capital market since November 2016, when FPIs had pulled out Rs 393.96 billion.
Harsh Jain, the chief operating officer at Groww, an investment platform, attributed the outflow mainly to rise in the cost of crude oil prices. This would impact all the oil importing economies, including India, and adversely affect its current account deficit, fiscal deficit, imported inflation and create headwinds for economic growth.
Besides, investors were cautious about US President Donald Trump's meeting with North Korean leader Kim Jong Un. The US has also threatened to impose tariffs on auto imports.
Also, FPIs had begun profit booking before the Karnataka elections, which was a crucial indicator for the 2019 big elections results, he added.
"Another discomfort among the FPI (Category III) was Sebi's requirement for additional documents from the key people in such a fund. Their concern is around the privacy and data theft," Jain noted.
So far this year, FPIs have pulled out over Rs 21 billion from equities and withdrew more than Rs 300 billion. FPI outflow hits 18-month high at Rs 297 bn on the surge in crude prices from the debt market.

FPIs pull out $2 bn in just 8 trading sessions as crude, G-sec yields rise

Foreign investors have pulled out Rs 126.71 billion ($2 billion) from the Indian capital markets, in the last eight trading sessions, primarily due to a surge in global crude prices and rise in yields of government securities here.
These developments follow an outflow of over Rs 155 billion from the capital markets (equity and debt) in April, the steepest in 16 months.

As per the latest depository data, Foreign Portfolio Investors (FPIs) withdrew a net sum of Rs 40.30 billion from equities and another Rs 86.41 billion from the debt market during May 2-11, taking the total to Rs 126.71 billion (about $2 billion).
"An increase in (government securities) yields in the domestic market has seen FPIs pulling out money from the Indian debt markets, whereas outlflow of money from equity market is a function of rise in global yields and deterioration in macroeconomic fundamentals of Indian economy largely due to rising crude prices.
"Besides, FPIs have also booked profit ahead of the upcoming state election," Rakesh Tarway, head of research at Reliance Securities.
According to Prabhudas Lilladher CEO Ajay Bodke, there has been a heightened risk aversion as markets are watching with caution the outcome of key developments related to US-Iran and Karnataka elections.
"Firstly, whether a headstrong Trump tears the Iran nuclear accord despite fervent pleas from other signatories. Withdrawal by the US and reimposition of tough economic sanctions on Iran has the potential to send global crude oil prices soaring as Iran is one of the largest suppliers of crude," he said.
This would impact all the oil importing economies, including India, and adversely affect its CAD, fiscal deficit, imported inflation and create headwinds for economic growth, he added.
"Secondly, an adverse outcome for the BJP in Karnataka polls may embolden the opposition's shrill criticism of government's economic policies creating roadblocks for future reforms. Conversely, a favourable outcome for the BJP will strengthen its resolve to carry forward the momentum in the next round of assembly polls in October 18," Bodke pointed out.
So far this year, FPIs have put in over Rs 44 billion in equities and withdrew more than Rs 190 billion from the debt market.