FPIs continue buying spree, invest Rs 24,965 crore in February so far

Foreign institutional investors (FIIs) maintained their buying spree of Indian market, investing Rs 24,965 crore so far in February amid optimism about the COVID-19 vaccine and faster-than-expected economic recovery. The Union Budget proposals also boosted investors' sentiment.

As per depositories' data, foreign portfolio investment (FPIs) pumped in Rs 24,204 crore into Indian equities and Rs 761 crore in the debt segment, taking the total net investment to Rs 24,965 crore during February 1-19. Last month, FPIs made net investment of Rs 14,649 crore.

According to S Ranganathan, head of research of LKP Securities, FPIs remained positive on Indian markets as International Monetary Fund (IMF) predicted India to be the fastest growing economy in 2021. The international agency projected an 11.5 per cent growth rate for India in FY22, revising up its earlier forecast of an 8.8 per cent expansion. With this, India will be the only major economy of the world to register double-digit growth amidst the coronavirus pandemic.

"A pro-growth Budget aimed at leveraging the digital revolution is transformational and we expect FPI flows to continue next month as well aided by MSCI rebalancing," Ranganathan added.

Rusmik Oza, executive vice president, head of fundamental research at Kotak Securities, said that better earning performance by India Inc also boosted investors' sentiment.

For emerging markets, Oza said flows have been muted in emerging markets this month to date. Only India and Taiwan have received meaningful FPI flows this month to date, he added.

Also read: M-cap of 8 out of 10 top firms plunges by Rs 1.23 lakh crore this week

Regarding debt segment, Himanshu Srivastava, associate director - manager research, Morningstar India said, FPIs have stayed away from Indian debt markets for a long time now "mainly on concerns around COVID-19, calibrated support by RBI and low interest rates."

Going ahead, the focus will be on how soon India gains economic momentum. 

Also read: Sensex slips 1,600 points from record high as post-Budget rally fizzles out

"However, the way markets are headed and given high valuations, there is a strong possibility of profit-booking at regular intervals, which could slow down the pace of net flows," Srivastava said.

Emerging markets like India may continue to receive foreign investments, as long as central banks globally adopt an accommodative stance in order to bring their economies back on track from the impact of coronavirus pandemic, he added.

With PTI inputs