FPIs remain bullish on India; equities investments up 40 percent

New Delhi, April 3:

Buoyed by the recent government-backed reforms and hopes of a strong revival in India’s economic growth, foreign players increased their investments in the Indian equities markets by 39.67 percent by pumping Rs.111,333 crore during 2014-15.

According to data with the National Securities Depository Limited (NSDL), the Foreign Portfolio Investors (FPIs) infused Rs.79,709 crore into the equities market in 2013-14.

The foreign institutional investors (FIIs) along with sub-accounts and qualified foreign investors have been clubbed together by market regulator Securities and Exchange Board of India (SEBI) to create a new investor category called FPIs.

“The rise can be attributed to the fact that we were at a low base during 2013-14 and that the Indian markets were cheap and the currency even made it more cheaper to invest here,” Anindya Banerjee, senior manager, currency derivatives, Kotak Securities told IANS.

“There was also this huge shift in the Indian political landscape with a majority government coming into power and the euphoria surrounding the new government’s economic reforms agenda and the pace at which measures were announced and passed in parliament,” Banerjee added.

Alex Mathews, head, research for Geojit BNP Paribas Financial Services expects that the trend will continue in the coming time as India will remain one of the fastest growing economies in the world.

“The trend will continue. India will remain one of the most attractive markets to invest in the world. With much awaited IPOs (initial public offerings) and disinvestment programs expected to come in this year, India will remain an attractive destination to invest,” Mathews told IANS.

“Globally, India is at a strong position in comparison to its peers, in terms of growth stable political climate, stable currency and a healthy economic outlook coupled with the ongoing economic reforms process,” Mathews added.

The FPI’s total investments in the debt and equities market in 2014-15 stood at Rs.277,461 crore from Rs.51,649 crore in 2013-14, signifying a whopping increase of 431.17 percent.

The exponential increase was the result of the Rs.166,127 crore-investment by the FPIs in the debt markets in the fiscal under review. In 2013-14, the FPIs were net sellers in the same market segment. They had off-loaded stake worth Rs.28,060 crore in 2013-14.

For the January-March, 2015 quarter, investments by FPIs in the equities markets soared by 64.32 percent at Rs.36,473 crore from Rs.22,195 crore infused in the corresponding quarter of 2014.

The calendar year first quarter also saw the FPIs increasing their stake in the debt market. Their total investments in the debt market grew by 19.61 percent at Rs.42,502 crore from Rs.35,532 crore invested in the like quarter of 2014.

The total investments in the debt and equities market in January-March 2015 quarter grew by 36.80 percent at Rs.78,975 crore from Rs.57,727 crore.

However, for the month of March, the FPIs’ investments in the equities markets plunged by 39.84 percent at Rs.12,078 crore from Rs.20,077 crore infused in the corresponding month of 2014.

The FPIs’ stakes in the debt market too declined in March. Their investments in the debt market fell by 25.38 percent at Rs.8,645 crore from Rs.11,586 crore invested in the corresponding period of 2014.

FPI’s total investments in the debt and equities market in March 2015 plunged by 34.55 percent at Rs.20,723 crore from Rs.31,663 crore.

“March was a one-off situation as Indian equities were very cheap to invest in during March 2014. This attracted allot of investments. Now the Indian markets during March 2015 is over-weighted,” Banerjee said.

“Another reason for the slowdown is the fact that during March 2014 there was a euphoria building up around the political changes that were about to happen in the country,” Banerjee added.

Due to the upsurge in equity investment, the downward trend seen during the past 10 days at the sensitive index (Sensex) of the Bombay Stock Exchange (BSE) was reversed. It ended the 2014-15 fiscal with a gain of nearly 25 percent — thanks to the positive mood generated by the Narendra Modi government.

The Sensex closed on Tuesday, March 31, 2015 at 27,957.49 points — as against the close at 22,386.27 points on March 31, 2014 — to register an overall gain of 24.88 percent during the 2014-15 financial year, during which the index also breached the psychologically-significant 30,000-mark.

This has been the best performance of the Sensex in five years. IANS