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Tuesday, January 19, 2021

Markets rejoice as liquidity & vaccine hopes make FPIs usher in record Rs 2 lakh crore in FY21 so far

The continued momentum of FPI money has lifted the premier indices at BSE and NSE to fresh highs on Wednesday. While the Sensex closed at a new high of 46,666, the Nifty closed at 13,682.

By: ENS Economic Bureau | Mumbai | Updated: December 17, 2020 12:01:32 am
Pedestrians wearing protective masks walk past the Bombay Stock Exchange (BSE) in Mumbai, India, on Friday, March 27, 2020. (Photographer: Dhiraj Singh/Bloomberg)

Net inflow by foreign portfolio investors into domestic equities crossed Rs 2 lakh crore for the current financial year — the highest ever in any financial year. The continued momentum of FPI money has lifted the premier indices at BSE and NSE to fresh highs on Wednesday. While the Sensex closed at a new high of 46,666, the Nifty closed at 13,682.

While the FPIs had pulled out a record of Rs 61,973 crore in March and followed it with additional net outflow of Rs 6,884 crore in April, in line with global concerns over spread of pandemic and its impact on world economy, they started allocating funds back into emerging markets beginning May after several countries announced big stimulus packages to support their respective economies and there was ample liquidity in the market.

While FPI inflow has been positive for all month since May, barring September, the inflow jumped significantly in November and December, in line with positive news flows including US election result and successive announcements of high efficacy of Covid-19 vaccines manufactured by four candidates.

Following this, November witnessed the highest-ever monthly inflow of Rs 60,358 crore into domestic equities, and, in December (to date), they have already invested a net of Rs 44,209 crore. The net FPI inflow in the current financial year crossed Rs 2,00,484 crore and it is still the ninth month.

The sharp inflow in November and December led to significant rise in the stock markets. Since November 1, the Sensex at the BSE has risen 18 per cent, the broader mid- and small-cap indices have risen by 20 per cent each.

The domestic investors, however, have been busy booking profits following the jump in the stock markets and that has resulted into net outflow by domestic institutional investors.

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