FPI inflows hit 10-month high of Rs 12,260 crore in November! Here’s how this will strengthen the value of Indian Rupee

It has been week of continuous good news for India. After the strength in value of rupee and decrease in prices of crude oil now another power packed news has striked the doors of nation. It has come to notice that the foreign portfolio investment (FPI) in India has touched new records

In the month of November, overseas investors have pumped Rs12, 260 crore into the Indian capital markets making it the highest inflow in 10 months. Out of the Rs 12, 260 crore invested in the market, FPIs invested a net sum of Rs 6,913 crore in equities in November and Rs5, 347 crore in the debt market as recorded by the latest depository data.

Whereas in the previous months, foreign portfolio investments has not shown good records. In the month of July and August FPIs had invested Rs7,300 crore in the market while in the month of September and October the inflow came following a net withdrawal of close to Rs 60,000 crore from the capital markets (equity and debt together). Before this it was in January when foreign portfolio investors had put in Rs 22,240 crore in the capital markets.

There were many factors which led FPIs to withdraw their investments from the Indian markets in September and October Hike in rates by the US Fed, rising crude oil prices, depreciating rupee, worsening current account deficit, uncertainty over the government’s ability to meet fiscal deficit and the impact of these factors on the country’s macro-economic condition are some of them,” said Himanshu Srivastava, senior analyst manager research at Morningstar.

But now with the improvement in many of factors along with strengthening of rupee against dollar, decreasing crude oil prices and improvement in liquidity situation, FPIs made a comeback in November into the Indian markets.

So far this year, FPIs have pulled out over Rs88, 000 crore from the capital markets. This includes over Rs 35, 000 crore from equities and close to Rs53, 000 crore from the debt markets.

Not only foreign portfolio investments but foreign institutional investors also have poured in Rs 9,080 crore into the Indian market this month compared to Rs 38,906 crore withdrawals made in October

In recent days, the value of rupee surged past 70/$ mark for the first time in three months and crude oil prices have come down by over 30 per cent since it touched its recent peak in the month of October. Also in money market Government bonds sharply owing to a sustained decline in oil prices.

These all are positive indicators for our economy. Increasing foreign portfolio investments and foreign institutional investments will lead to rise in the value of rupee since there is more demand for the home currency from foreign investors after entering the country. Also fall in crude prices will ease concerns over India’s current as well as fiscal deficit along with strengthening the rupee

Where are the opposition and its agents who have been crying so loud in previous days? Why they are silent now when continuous positive developments are happening? Where are they hiding? Why the media is not penning down such important developments?

Source: LiveMint



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