In August the excess liquidity in global markets finds its way to the developing markets like India has been sold by foreign investors on a net basis on Indian markets for 41,330 crores.
The Foreign Portfolio Investors (FPI) pumped between 3 and 21 August to a total of Rs.40,262 crore in equity and Rs.1,059 crore in the debt segment. Until that for two consecutive months, the FPIs had been net buyers. In July, they spent a total of Rs.3,301 crore and net of Rs.24,053 crore.
In the world economy, excess liquidity is available in various large central banks, according to Himanshu Srivastava, Associate Director and Research Analyst of Morningstar India. Several central banks have called for aggressive coronaviral stimulus steps and assisted their declining economies.
The FPIs have concentrated on emerging markets such as India, Srivastava said, since they are well run and offer a strong chance of producing better returns.
In the internal line, it is a good sign that markets are opening up and companies are resuming. Furthermore, Indian shares remain appealing and thus attract the attention of the FPI, he said.
“For FPIs now continue to collect mid-size and small-cap stocks after investing in bluechip stocks,” said Harsh Jain, Co-Founder & COO of Groww. FPIs focused on gold and bluechip stocks, which have a stable and better capacity to manage times of pandemic economic problems. Now, nearly four months after the shutdown began, we have a much better than expected, clearer image of the economy. In this sense, several FPIs begin making selective choices in the middle and in the limited capacities as new chances arise.
“Due to the strong flow of FPI and active participation of local investors by direct equities, Nifty-50 was trading above the 11,000-mark,” said Rusmik Oza, Executor Vice President, Chief Fundamental Research Of Kotak Securities. “FPIs were net sellers in most other emerging markets this week and this month.
Harsh Jain added: “The US election and its outcome can play a major role in deciding what movement the US economy is going to have an impact in effect on FPI investments in India. Excess liquidity supply in the global financial system will continue to ensure that India earns its share of investment.”
