After pulling out over Rs 60,000 crore in April-June quarter, foreign investors have pumped Rs 6,669 crore into the Indian capital market so far this month amid better corporate earnings and correction in the mid and small-cap space.
The reversal of outflows began in July when FPIs put Rs 2,264 crore in equity and debt markets. Overseas investors had pulled out over Rs 60,000 crore during April-June in the wake of the surge in crude oil prices and fears over rate hike by the US Fed.
Foreign portfolio investors (FPIs) invested Rs 2,048 crore into equities during August 1-24 and Rs 4,662 crore into the debt market, according to NSDL data.
“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 IMF on India,” said Himanshu Srivastava, senior analyst at Morningstar.
Analysts are not sure about the continuation of FPI flows. On the one hand RBI has enlarged the scope for their operations in the debt segment. On the other hand, higher rates in the US and a weaker rupee will hinder such decisions.