FPIs eye earnings recovery, put Rs 87 bn into capital markets in Jan so far

Overseas investors have put in a whopping Rs 87 billion in the Indian capital markets this month so far on expectation of recovery in corporate earnings and attractive yields.

This follows an investment of Rs 2 trillion in the capital markets (equity and debt) in the entire 2017.

Quantum MF Fund Manager-Fixed Income Pankaj Pathak, however, believes foreign portfolio investors (FPIs) may not be able to repeat this showing in 2018 as withdrawal of liquidity and rate hikes in developed economies pick up.

According to the depositories data, FPIs infused in a net amount of Rs 57.69 billion in equities and Rs 29.40 billion in the debt markets during January 1-19 -- translating into a net inflow of Rs 87.09 billion.

"The inflow in the current month can be attributed to anticipation of earnings recovery and attractive yields which is expected to further strengthen inflow from foreign investors in current financial year," said Dinesh Rohira, CEO of 5nance.

Morningstar India's Senior Analyst Manager (Research) Himanshu Srivastava said: "Given 2019 (elections) would not be far, the expectation of some other economic reforms from the government would be high. But the major for FPIs going ahead would be to see growth coming back in the domestic economy, which has not yet picked up contrary to the expectation".