Stacks of $1 dollar notes move through a machine at the U.S. Bureau of Engraving and Printing in Washington, D.C., U.S., on November 15, 2017. (Photographer: Andrew Harrer/Bloomberg)

FPIs Invest Over $1 Billion In November So Far, As Oil Eases, Rupee Recovers

Foreign investors have pumped in nearly Rs 8,285 crore into the Indian capital markets so far this month—after pulling out funds in October—due to the fall in crude oil prices, a recovery in the rupee and an improvement in the liquidity situation.

The recent infusion comes following a net outflow of more than Rs 38,900 crore in October, which was the steepest withdrawal in nearly two years.

Foreign portfolio investors had pulled out over Rs 21,000 crore from the capital markets (both equity and debt) in September. Before that, they had put in Rs 7,500 crore in July and August.

According to depositories data, FPIs infused Rs 3,862 crore in the equity markets during November 1-16, and Rs 4,423 crore in the debt market.

This took the total to Rs 8,285 crore or $1.14 billion.

Himanshu Srivastava, Senior Analyst Manager Research, Morningstar Investment Adviser India, attributed the latest inflow to the fall in crude prices, the rupee’s recovery in rupee and an improvement in the liquidity situation.

On the global front, escalating trade war tensions between the U.S. and China has caused widespread uncertainty in emerging markets. This, coupled with increasing interest rates globally, has turned investors the world over risk-averse, which prompted them to look for other attractive and safer alternatives, Srivastava said.

“I don't expect any significant inflow from FPIs in the remaining part of this year. Movement of rupee versus dollar, direction of crude prices, domestic liquidity, upcoming state elections as well as general elections next year are some of the factors which the FPIs would be watching closely. Plus, there are other emerging markets like China and Brazil which are better placed in terms of valuation compared to India. Looking at all these factors and the ongoing scenario, there is still some time before India sees strong inflows from FPIs,” he added.

FPIs have pulled out over Rs 92,000 crore from the capital markets so far this year. This includes more than Rs 38,000 crore from equities and nearly Rs 54,000 crore from the debt market.