Foreign Portfolio Investors Come Back To India In November

November 26, 2018
Foreign Portfolio Investors Come Back To India In November November 26, 2018 Clive Nelson

It’s been a harsh few months for the Indian economy. September and October saw some of the biggest withdrawals by foreign portfolio investors (FPIs) in recent memory. In September, they pulled out Rs 21,000 crore. This was followed up by a withdrawal of Rs 38,900 crore in October. However, November saw them coming back with Rs 6,310 crore being pumped into the markets.

Many analysts point to the strengthening rupee and the easing of oil prices as one of the reasons for the return of investors. From November 1 to 22, FPIs invested Rs 923 crore in India’s equity market and Rs 923 crore in the country’s debt market. This is the equivalent of $862 million, which is a sizable investment in the market.

However, the escalating trade war between the US and China may put this all at risk. Additionally, global interest rates are on the rise, making many investing seek more profitable investment markets. This may make these gains temporary and can mean a future dry period of investment from FPIs.

In a statement, Himanshu Srivastava, analyst at Morningstar Investment Adviser India said

Movement of rupee versus the dollar, the 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.

FPI Outlook

Admittedly, the FPI outlook for India is not looking that good. In a recent Care Ratings study, five out of the past seven months saw massive FPI outflows. The only exceptions are July and August. November is looking to be another change in the outflow pattern. This is a far cry from India’s 2017 FPI performance, which saw inflows of Rs 2 lakh crore for the year.

The Indian government is doing its best to stem the tide of FPI outflows. Subhash Chandra Garg, the country’s Economic Affairs Secretary, said that the government is aiming for stability in investment instead of the current instability. However, there does not seem to be a lot of improvement.

For this year, foreign portfolio investors have already taken out more than Rs 94,000 crore from India’s capital markets. The break down is around Rs 41,000 crore from the equities market, while the debt market has seen a withdrawal of nearly Rs 53,000 crore. The Central Government and the Finance Ministry continues to make a lot of promises but the results are quite the opposite.

About the Author

Clive Nelson

Clive Nelson Author

Hi, my name is Clive Nelson and welcome to Traders Bible. Just to tell you bit about myself…I have been trading FX and binary options for the best part of 10 years now. After graduating with honours in economics, I began working for an investment bank in New York as an assistant trader before working my way up. After a few years, I went on to work as a broker in London, England and then eventually came back to the U.S to work in a hedge fund, where I manage $800 million of my clients’ investments. There have been times over the course of my career where I’ve had to take a hit, but I’ve accepted that losing is part of the game, it’s a learning curve. I’ve learnt from my mistakes and you don’t have to make the same errors I did. A lot of my education came from when I was a broker and this is why I’m here to tell you that Traders’ Bible offers you the foundations of how to become a great trader.

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