Foreign Portfolio Investment (FPI) inflows during the period between January-June 2017 (H12017) stood at nearly $23 billion into the Indian capital markets, largely driven by several factors, including expectations from the government that it would speed up development and economic reforms. While, in the first half of 2016, FPIs had invested about $1.2 billion. According to latest depository data, FPIs in H12017 invested a net Rs 53,354 crore in equities, while pumped Rs 94,199 crore in the debt market during the time period, translating into a net inflow of Rs 147,553 crore.
Starting the year on a negative note, the foreign investors had in January pulled out Rs 3,495 crore from the capital markets on worried about lower prospects of growth in the Indian economy compared to other emerging markets. In addition, impact of change in policies by US President Donald Trump and demonetization back home were the other contributing factors.
However, FPIs had reversed the outflow trend in February and the infusion continued till June, enthused by clarity on FPI taxation, GST roll-out and expectations of a good monsoon. Going forward, there are a few challenges but they are not strong enough to disrupt the current trend. Markets and the rupee are soaring to new high, which offer a good profit booking opportunity for the foreign investors.