FPIs pick India over other emerging markets, pump in $4 bn in July

Overseas investors have pumped a staggering $4 billion into the Indian capital market this month, primarily due to "better prospects" of economic growth as compared to other emerging markets.

The latest inflow follows net infusion of Rs 1.6 lakh crore in the previous five months (February-June). In January, they had pulled out Rs 3,496 crore.

"FPI inflow could be attributed to relative opportunity or better prospects of growth in the Indian economy as compared to other emerging markets as well as developed countries," Vidya Bala, Head of MF Research at Fundsindia.com, said.

Better-than-expected earnings by most corporates so far and a steady progress in monsoon also aided investors' sentiments, said Anand James, Chief Market Strategist, Geojit Financial Services.

According to latest depository data, FPIs invested a net Rs 7,611 crore ($1.2 billion) in equities during July 3-28, while they poured Rs 18,599 crore ($2.9 ) in the debt markets review, translating into a net inflow of Rs 26,210 crore ($4.1 billion).

The inflow for the month could rise further as one day of trading session is still left, experts said.

With the latest inflow, total investment in the capital markets (equity and debt) has reached Rs 1.74 lakh crore ($26 billion) this year.

Himanshu Srivastava, Senior Research Analyst - Manager Research, Morningstar Investment Adviser India, said that he does not expect any dramatic change in the FPI inflow trend over the next couple of months.

There are few areas that FPIs will focus on: Impact of GST on the economy in the short run; signs of improvement in economic growth, which has not picked up contrary to expectations.