At US$ 36 Billion, FPI Inflows Into Equities at Record High Since FY13: RBI

According to the latest Reserve Bank data, foreign portfolio investors have poured a record US$ 36 billion into equities in FY21 up to March 10, 2021, the highest since FY13.

Net foreign direct investment inflows increased to US$ 44 billion by the end of January 2021, up from US$ 36.3 billion in January 2020, owing to massive inflows in November and December 2020, with the most recent inflows occurring in November 2020.

According to the report, the quality of FPI inflows boosted during the period, as category-I foreign investors, which include central banks, sovereign wealth funds, pension funds, regulated entities, and multilateral organizations, raised their stake to a high 95% of total equity assets at the end of February 2021, up from 87.5% at the end of December 2019.

According to depositories data, FPIs have been net buyers of equities worth Rs. 8,642 crore (US$ 1.19 billion) so far in March 2021. FPIs invested Rs. 14,202 crore (US$ 1.96 billion) in equities but withdrew Rs. 5,560 crore (US$ 766.95 million) from the debt market between March 1 and 19, leaving a net investment of Rs. 8,642 crore (US$ 1.19 billion). Prior to this, on a net basis, foreign investors had invested Rs. 23,663 crore (US$ 3.26 billion) in February and Rs. 14,649 crore (US$ 2.02 billion) in January.

Domestic equities, according to analysts, are appealing to foreign investors due to higher returns. A restructure in some global indices has also resulted in net inflows into domestic equities.

The global financial markets are flooded with liquidity as a result of the US’ announcement of a US$ 1.9 trillion pandemic relief package, which supported a steady flow of assets into emerging markets such as India.

With the exception of India, the majority of Asian and emerging markets have seen FPI outflows. Taiwan has experienced the highest FPI outflows this month, amounting to US$ 4.5 billion. South Korea and Taiwan have seen FPI outflows of US$ 11 billion and US$ 7 billion, respectively, this calendar year.

As per RBI, as of March 5, 2021, the foreign exchange reserves stood at US$ 580.3 billion.

India recorded a 60% increase in fintech investments and surpassed China by raising US$ 647.5 million in 33 fintech fundraising deals.

According to the report, fundraising by the fintech sector increased 46% in February to US$ 200 million, up from US$ 137 million a year ago, due to the pandemic-fueled proliferation of digital payments.

Source: IBEF