FPIs remain net buyers for 5th month in a row, pump Rs 10,384 cr in June

Foreign investors infused a net amount of Rs 10,384 crore into the Indian capital markets in June and remained net buyers for the fifth month in a row on expectations of continued economic reforms.
Foreign portfolio investors (FPI) invested a net of Rs 2,272.74 crore in equities and Rs 8,111.80 crore in the debt segment, taking the total net investment to Rs 10,384.54 crore in June, according to the depositories' data.

"The net inflows in June emphasises that investors expect the continuation of economic reforms under the (Bharatiya Janata Party) BJP-led government which would propel economic growth. However, the low quantum of net inflows suggests that investors are not yet investing with full conviction and are adopting a wait-and-watch stance before the Budget scheduled on July 5," said Himanshu Srivastava, senior research analyst and manager (research), Morningstar.
So far in 2019, the FPIs have invested a net cumulative amount of Rs 87,313.22 crore since January, the data showed.
Except January, FPIs have been net buyers in 2019 till now and have invested a net 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).
"FPI investment, though trending down post March, continues to be positive. So long as the leading central banks continue to be dovish, FPI inflows will continue. As of now, there are no signs of a stance reversal," V K Vijayakumar, chief investment strategist at Geojit Financial Services, said.
Commenting on the outlook, he said, "The FPI into Indian equity will depend on the outcome of Budget to be presented on July 5th. Presently, there is no valuation comfort in the market and the monsoon has been well below the long-term average, which are likely to moderate FPI flows.

Foreign investors pull out Rs 4,375 cr in May so far

Foreign investors have pulled out a net amount of Rs 4,375 crore from the Indian capital markets in May so far, driven by global and domestic factors.
Prior to this, overseas investors had infused a net amount of Rs 16,093 crore in April, Rs 45,981 crore in March and Rs 11,182 crore in February in the capital markets (both equity and debt).

According to the latest depositories data, foreign portfolio investors (FPIs) withdrew a net sum of Rs 2,048 crore from equities and Rs 2,309.86 crore from the debt market during May 2-24, taking the total net outflow to Rs 4,375.86 crore.
"However, it is noteworthy that foreign investors pumped in money on the day of election results as the mandate became clear," said Vidya Bala, Head - Mutual Funds Research at FundsIndia.
FPIs invested a net Rs 1,352.20 crore in equities on May 23, when the ruling BJP scored a thumping victory in the general elections.
"While FPIs may remain cautiously optimistic on what the government will deliver in a second term, neglected cyclical segments from banks to capital goods to infrastructure-related plays may see increased interest from institutional investors," Bala added.
Kaustubh Belapurkar, Director - Manager Research, Morningstar Investment Adviser India, said, "The exit poll indications followed by the actual emphatic BJP victory has certainly enthused foreign investors. With a strong government at the Centre, we expect FPIs will be watching India more keenly amongst the emerging markets pack.

FPIs stay bullish on India for third month; invest Rs 17,219 cr in April

Foreign investors were net buyers in the Indian capital markets for the third straight month in April, pouring in Rs 17,219 crore on favourable macroeconomic conditions and ample liquidity.
India has been one of the top recipients of foreign fund flows among emerging markets since February 2019 on the back of positive global sentiment, improving growth outlook, supportive macros and dovish stance taken by the RBI, experts said.

Overseas investors had put in a net sum of Rs 45,981 crore in March and Rs 11,182 crore in February in the capital markets (both equity and debt).
According to the latest depositories data, foreign portfolio investors (FPI) pumped in a net sum of Rs 21,032.04 crore into equities but pulled out a net amount of Rs 3,812.94 crore from the debt market during April 1-26, taking the total net investment to Rs 17,219.10 crore.
"Expectation of a slowdown in the global economy led several central banks to adopt a dovish stance towards interest rates in order to provide a boost to their dwindling economies.
"This augured well for the emerging markets as it improved global liquidity which has been making its way into the emerging markets and India is getting its share from that," said Himanshu Srivastava, senior research analyst, manager research at Morningstar.
Alok Agarwala, Senior VP and Head - Investment Analytics at Bajaj Capital attributed the decline of foreign flows into debt markets to "rise in crude oil prices and worries over the supply overhang" as it has diminished the hope of yields coming down further.
Sustainability of economic growth, behaviour of crude oil prices and formation of a stable government at the Centre will play significant role in the continuation of FPI flows, he added.

FPIs remain bullish on Indian markets, pour in Rs 11,096 cr in April so far

Foreign investors have pumped in a net sum of Rs 11,096 crore into the Indian capital markets in April so far, driven by global and domestic factors.
Foreign portfolio investors (FPI) were net buyers for the previous two months as well, infusing a net sum of Rs 11,182 crore in February and Rs 45,981 crore in March.

Prior to that, FPIs had pulled out a net Rs 5,360 crore from the capital markets (both equity and debt) in January.
According to depositories data, FPIs invested a net amount of Rs 13,308.78 crore in equities and pulled out Rs 2,212.08 crore from the debt segment during April 1-12, taking the total net investment to Rs 11,096.70 crore.
"We are seeing this positive rally since February largely due to the rising confidence in having a stable government post elections. The fear of economic slowdown in the developed world has increased prospects of foreign money in the Indian market," said Harsh Jain, COO at Groww.
A dovish stance by central banks globally has also contributed to this trend, analysts said.
"The foreign inflows since February are due to the shift in stance on monetary policy outlook by various central banks globally. This along with the expectation of a positive outcome from the US-China trade agreement bolstered the risk-on sentiments among foreign investors," said Himanshu Srivastava, senior research analyst, manager research at Morningstar.
However, India is not the only country benefitting from the global factors as the trend is similar in other emerging markets as well. India is in the midst of general elections and any surprise on the political or economic growth front could potentially reverse the ongoing trend, he added.

FPI inflows into Indian equities hit 15-month high of Rs 17,220 cr in Feb

Foreign investors poured in close to Rs 17,220 crore on a net basis into Indian equities in February this year, the highest since November 2017, amid clarity on government spending plans and positive sentiments. Foreign portfolio investors had pumped in a net amount of around Rs 19,728 crore into Indian stocks in November 2017.
As per the latest data from the depositories, foreign investors pumped in Rs 1,17,899.79 crore into equities and pulled out Rs 1,00,680.17 crore in February, a net investment of Rs 11,183 crore into the stock market.

In the previous month (January 2019), however, foreign portfolio investment (FPI) outflows from equities stood at Rs 5,263.85 crore.
Foreign investors have turned into net buyers in February mainly on account of clarity on government spending post budget and value buying in several pockets, according to Vidya Bala, Head - Mutual Funds Research at FundsIndia, said.
She further said that inflows into the equity market can be attributed to a positive view on budget and dovish stance taken by the central bank.
"The Reserve Bank's decision to change its stance to neutral from calibrated tightening while cutting the repo rate by 25 basis points cemented the belief that bringing growth back is on the top of its agenda," Alok Agarwala, Head of Investment Analytics at Bajaj Capital, said.

FPIs turn net buyers in Feb; infuse Rs 5,300 cr in last 6 trading sessions

Foreign investors have infused close to Rs 5,300 crore in the Indian equity markets in the last six trading sessions, mainly on expectations of higher economic growth.
This comes following a pullout of Rs 5,264 crore by foreign portfolio investors (FPIs) in January. Prior to that, they had put in Rs 5,884 crore in the stock markets during November-December 2018.

According to data available with depositories, FPIs put in a net amount of Rs 5,273 crore in equities during February 1-8. However, they pulled out a net sum of Rs 2,795 crore from the debt market during the period under review.
After turning net sellers in January, FPIs have turned net buyers in February so far. Though it is a welcome change, it is too early in the month to conclude as to where the flows are headed, analysts said.
However, the recent net inflows could be somewhat attributed to the positive view on the Budget and government resolve in working towards bringing economic growth, said Himanshu Srivastava, Senior Analyst Manager Research, Morningstar Investment Adviser India.
"Despite the recent net inflows, I believe the broader approach would continue to be cautious and FPIs would continue to adopt a wait and watch approach. The focus would continue to be on the country's progress on the economic growth front as well as the general elections," he added.
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, he added.
The stance of US Fed towards interest rates will also play a significant role in foreign fund flows.

After Sept pull out, FPIs infuse Rs 48 bn on rupee rise, oil prices drop

Foreign investors have pumped in nearly Rs 48 bn into the Indian capital markets in the last five trading sessions, after pulling out hefty funds in October, amid cooling global crude oil prices and rising rupee.
The recent infusion comes following a net outflow of more than Rs 389 bn in October, which was the steepest withdrawal in nearly two years.

FPIs had pulled out over Rs 210 bn from the capital markets (both equity and debt) in September. Before that, foreign investors had put in Rs 75 bn in July and August.
According to depositories data, foreign portfolio investors (FPIs) infused Rs 2.15 bn in the equity markets during November 1-9, and Rs 45.57 bn in the debt market, taking the total to Rs 47.72 bn.
"Continued fall in oil prices and drop in yield eased liquidity concerns," said Vinod Nair, Head of Research, Geojit Financial Services.
Adding to the upbeat mood, GST collections in October crossed the Rs 1 trillion mark, after a five-month gap, on the back of festive spending and anti-evasion measures, Finance Minister Arun Jaitley tweeted earlier this month.
The Finance Ministry had said 67,45,000 businesses filed Goods and Services Tax (GST) returns in October and deposited Rs 1 trillion as taxes.
However, FPIs have pulled out over Rs 950 bn from the capital markets so far this year. This includes Rs 419 bn from equities and Rs 536 bn from the debt markets.

Sell-off continues: FPIs pull out Rs 320 bn in Oct on trade war, weak rupee

Foreign investors have pulled out close to Rs 320 billion from the Indian capital markets in the first three weeks of this month due to the ongoing global trade tiff, rising crude prices and higher US treasury yields.
This is much higher than the over Rs 210 billion net outflow seen in entire September. Prior to that, overseas investors had put in a net amount 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 198.10 billion during October 1-19 and bonds worth Rs 121.67 billion, taking the total to Rs 319.77 billion (USD 4.3 billion).
FPIs have been net sellers almost throughout this year except a couple of months. However, experts said the swiftness of the exit in October thus far has shaken the market.
Negative sentiments from the global market on concerns over a slowing world economy led by lingering trade war between the US and China triggered the FPI pullout, said Vinod Nair, Head of Research, Geojit Financial Services.
The sentiment was also dampened by the International Monetary Fund (IMF) downgrading the outlook for world economy to 3.7 per cent growth earlier this month.
Alok Agarwala, Senior Vice President and Head Investment Analytics at Bajaj Capital, attributed the FPI selling to rise in oil prices and US treasury yields and a tightening of global dollar liquidity.
He further said this is a global phenomena across emerging markets and not limited to India alone. However, the impact of rise in oil prices is higher for India as it imports most of its oil requirement and the matter was further exacerbated by the IL&FS default and the rout in NBFC debt papers, he added.
ALSO READ: MFs pump Rs 110 bn in equities in a fortnight, FPIs stance remains bearish
Vidya Bala, Head of Mutual Fund Research at FundsIndia, said rising rates in the US, strengthening dollar and higher US earnings have been triggers for money moving out of India and other emerging markets to the US.
Locally, rising oil price, the recent spate of management-related issues in banks and tightening liquidity in NBFCs have been immediate triggers.
Going ahead, Bala said volatility can be expected to continue for other reasons too, like US sanctions on Iran which take effect in November 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.
So far this year, FPIs have pulled out over Rs 330 billion from equities and more than Rs 600 billion from the debt markets.

Foreign investors remain bullish on India, infuse Rs 51-bn in August

Foreign investors have infused over Rs 51 billion into the country's capital market in August -- the second consecutive month of inflow -- on improvement on the macro front, better corporate earnings and correction in the mid and small-cap space.
The latest inflow comes following a net infusion of over Rs 23 billion in the capital market -- both equity and debt -- in July. 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) pumped in a net sum of Rs 17.75 billion into equities in August and a net amount of Rs 34.14 billion into the debt market, taking the total to Rs 51.89 billion.
After three months of huge outflows from April till June, analysts said it is encouraging to see FPIs making a comeback in July and August.
ALSO READ: RBI balance sheet expands by 9.5% in FY18 on rise in foreign investments
"The recent net inflow could be attributed to improvement on the macro front, better earnings from corporate, correction in the mid and small-cap space and positive observations of International Monetary Fund (IMF) on India," said Himanshu Srivastava, Senior Analyst Manager Research at Morningstar.
"The direction is definitely positive. However, the quantum of inflows from FPIs is much lower than what we have seen in the past when they come with full conviction. It indicates that there is a fair bit of uncertainty and cautiousness among FPIs at the moment," he added.
Overall, so far this year, overseas investors have pulled nearly Rs 24 billion from equities and close to Rs 380 billion from the debt markets.

FPIs extend selling; pull out Rs 20 bn in July on fuel prices, weak rupee

Continuing their selling spree, foreign investors have pulled out over Rs 20 billion (Rs 2,000 crore) from the capital markets this month so far on higher crude oil prices and a depreciating rupee.
The latest sell-off comes after foreign portfolio investors (FPIs) withdrew over Rs 610 billion (Rs 61,000 crore) from the capital markets in the last three months (April to June). Prior to that, overseas investors had infused Rs 26.6 billion (Rs 2,661 crore) in March.

ALSO READ: FPIs selling spree continues; withdraw Rs 12 bn from markets in July so far
As per data compiled by depositories, net outflow in the debt markets stood at Rs 11.73 billion (Rs 1,173 crore) during July 2-20, while the same in equity was at Rs 858 crore, resulting in a net withdrawal of Rs 20.31 billion (Rs 2,031 crore).
"Selling by FPIs 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.
ALSO READ: After months of hefty pullout, FPIs infuse Rs 30 bn in just five days
"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.
Explaining about outflows from equity markets, Srivastava said higher crude oil prices, increasing retail inflation, depreciating rupee against the US dollar, high chances of further rate hikes by the US Federal Reserve and fear of global trade war are the key factors behind the trend.
ALSO READ: FPIs withdraw Rs 55 bn from markets in June so far on trade war worries

FPIs turn positive on Indian equities; pump in Rs 84 billion in March

Foreign investors have infused over Rs 84 billion in the Indian equity markets so far in March on expectations of rebound in corporate earnings and easing of global oil prices.
However, they pulled out nearly Rs 100 billion from the debt markets during the period under review, depositories data showed.

Net inflow by foreign portfolio investors (FPIs) in equities stood at Rs 84.4 billion during March 1-23.
This comes following an outflow of over Rs 110 billion from equities and more than Rs 2.5 billion from the debt markets last month.
The positive sentiments in equities could be attributed to a likely strong rebound in corporate earnings over the next two quarters and ease of global oil prices providing a relief on the macro front, said Ajay Bodke, CEO and Chief Portfolio Manager PMS at Prabhudas Lilladher.
"Equity had massive outflows in February (due to global macro concerns and high Indian valuations) which might have come back in March due to reasonable valuations and oil nations SWF (sovereign wealth fund) pumping money in India," Harsh Jain, COO at Groww, said.
Regarding the outflow from the debt markets, Jain said FPIs withdrew money from the segment in both February and March probably due to the surge in interest rates increasing in home markets as well as Indian rupee depreciation outlook due to crude price and fiscal deficit.
So far this year, overseas investors have put in a net sum of Rs 1118 billion in equities, while they have withdrawn a net amount of over Rs 17 billion from the debt markets.

Who will buy the Rs 4.6 trillion bonds? Market bets on banks' return

With banks staying out of the bond market, fearing rising mark-to-market losses, and foreign investors exhausting their investment limit, the question is who will buy the Rs 4.6 trillion bonds that will be issued from April.
Foreign portfolio investors (FPIs) can buy up to 5 per cent of the total bonds outstanding. FPIs own around 4.5 per cent of the total outstanding debt.
The government has not said if this facility will be widened. A high proportion of domestic debt in foreign hands could create instability. However, the market is expecting the government will allow FPIs slightly more play in the Indian debt market.
Nomura estimates that an increase in foreign shareholding, from 5 per cent to 6 per cent of the total outstanding, will increase the limit by Rs 800 billion. A gradual opening up, according to Nomura, would be helpful in reducing the reliance on one investor class. This will be healthy for market dynamics in the medium term, by freeing up liquidity to support credit growth and ease the pressure on local banks to support the borrowing programme, Nomura added.
Early signs show that banks could be returning to the bond market. Yields on the 10-year bond have fallen around 10 basis points this week as local banks turned bullish on bonds.
Even as advance tax outflow drained liquidity from the system, leaving it with a net liquidity of about Rs 550 billion, neither did yields jump nor did call rates fluctuate.
Chart “The expectation is that the government will front-load its expenditure, which will improve liquidity substantially. The recent drop in yields show that we could be heading towards a stable state and banks would have no issue coming back,” said Harihar Krishnamurthy, head of treasury at First Rand Bank.
Bond dealers said the Reserve Bank of India (RBI) could start purchasing bonds from the secondary market in the new fiscal year, which is opposite to what it did in the current year. The RBI’sRs1 trillion worth of open market operations drained the system of liquidity, which the central bank said it would compensate through extra liquidity operations.
The RBI may have to buy bonds now to support the market. The bond market is dependent on banks and insurance companies. According to Nomura, in the first three quarters of 2017-18, commercial banks bought 54 per cent, insurance companies 33.4 per cent and FPIs 17.8 per cent of the net supply of bonds. Commercial banks own 41.4 per cent of domestic bonds, followed by insurance companies holding 23.6 per cent.
“The combination of front-loading of supply by the government and the RBI’s open-market operations sales drove the rise in Indian bond yields. Quarterly data suggests the mutual fund community also contributed to the bond sell-off in the third quarter of 2017-18,” said Nomura.

Expecting earnings recovery, FPIs put $3 bn in Indian markets in Jan so far

Foreign investors have pumped in a staggering $3 billion (nearly Rs 18,000 crore or Rs 180 billion) into the country's capital markets this month so far on the expectation of recovery in corporate earnings and attractive yields.
This comes following an outflow of over Rs 35 billion (Rs 3,500 crore) by foreign portfolio investors (FPIs) from the capital markets (equity and debt) in December, depositories data showed.
"The inflow in the current month can be attributed to anticipation of earnings recovery and attractive yields, which is expected to further strengthen inflow from foreign investors in the current financial year," said Dinesh Rohira, CEO of 5nance, an online platform providing financial planning services.
According to the depositories data, FPIs infused a net amount of Rs 117.59 billion (Rs 11,759 crore) in equities and Rs 61.27 billion (Rs 6,127 crore) in debt during January 1-25 — translating into net inflows of Rs 178.66 billion (Rs 17,866 crore).
In the entire 2017, FPIs put in a collective amount of Rs 2 trillion in equity and debt markets.
Quantum MF Fund Manager-Fixed Income Pankaj Pathak, however, believes that FPIs may not be able to repeat this showing in 2018 as withdrawal of liquidity and rate hikes in developed economies pick up.
"Given 2019 general election would not be far, the expectation of some other economic reforms from the government would be high.
But the major for FPIs going ahead would be to see growth coming back in the domestic economy, which has not yet picked up contrary to the expectation.
"In a nutshell, India must compete with other emerging markets to attract higher chunk of FII flows. Hence, we must be better poised in terms of risk reward profile compared to them," Morningstar India Senior Analyst Manager (Research) Himanshu Srivastava said.