Foreign investors pour USD 3.5 bn in Apr amid Sebi raising FPIs investment limit in government debt

Foreign investors poured a staggering USD 3.5 billion in the Indian capital markets in April as Sebi raised investment limit for FPIs in government debt coupled with strong global cues.

Most of the funds were invested in the debt markets during the month. "Foreign Portfolio Investors (FPIs) are investing more in debt mainly due to two reasons. Sebi raised FPI investment limit for government debt and benchmark 10-year government bond yield rose to its highest in 7 months," Advisorymandi.com CEO Kaushalendra Singh Sengar said.

Besides, RBI Governor Urjit Patel recently said that banks still have scope to cut loan rates even though demonetisation has already helped faster monetary transmission into interest rates, which has further raised investors' sentiments.

Further, signs of revival in quarterly earnings of domestic companies and the victory of centrist Emmanuel Macron as French presidential candidate for May election lifted the global investor sentiment, Geojit Financial Services Head of Research Vinod Nair said.

According to the depository data, FPIs infused a net sum of Rs 2,394 crore in equities in April and another Rs 20,364 crore in the debt segment, translating into a combined inflow of Rs 22,758 crore (USD 3.5 billion).

This follows a record net inflow of Rs 56,944 crore (USD 8.7 billion) last month, mainly on expectations that BJP's victory in the recently held assembly polls would lead to faster reforms.

In February, FPIs had made a net investment of Rs 15,862 crore in equity and debt markets. Prior to that, FPIs had pulled out more than Rs 80,000 crore between October 2016 to January 2017.

With the latest fund mobilisation, total inflow has reached to Rs 91,385 crore (USD 14 billion) so far this year in the capital markets (equity and debt).