After pulling out hefty funds from the capital market over the past two months, overseas investors have turned net buyers in October so far and pumped in over Rs 2,000 crore, buoyed by RBI’s 50-bps rate cut and an expected delay in rate hike by the US Federal Reserve.
The net inflow by foreign portfolio investors (FPIs) in the stock market stood at Rs 1,607 crore on October 1-9 while it read Rs 406 crore for the debt market, translating into a net inflow of Rs 2,013 crore, depository data showed.
Prior to that, FPIs pulled out over Rs 23,000 crore from the capital market (equities and debt) in the past two months on fears of an economic slowdown in China, which led to a global sell-off.
They withdrew Rs 5,784 crore last month and another Rs 17,524 crore in August, the highest net outflow by FPIs in a single month since 1997. The segregated data prior to 1997 are not available.
Investor appetite returned after RBI Governor Raghuram Rajan last month pulled off a surprise by announcing a bigger-than-expected policy rate cut of 50 bps to 6.75 per cent — the lowest in four-and-a-half years — to spur growth, said Gaurav Jain, Director, Hem Securities.
Furthermore, prospects of a delay in the rate hike by the US Federal Reserve from near-zero levels has helped the inflows.
“The odds of a US rate hike in October have lessened due to poor payroll data,” said Vinod Nair, Head—Fundamental Research at Geojit BNP Paribas Financial Services.
Some other macro parameters helped too, with fiscal deficit for April-August narrowing to 66.5 per cent of the full-year target and infrastructure output growing 2.6 per cent in August.
Since the beginning of the year, overseas investors have made a net investment of Rs 22,654 crore in equities and Rs 39,802 crore in the debt market.
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