FPI inflows hit 4-mth low at Rs 12,262 cr in Aug

New Delhi After pouring a whopping amount into Indian equities in the past three months, foreign investors have slowed down the pace of inflow to Rs12,262 crore in August on higher crude oil prices and resurfacing of inflation risks.

“FPIs are adopting a ‘wait and watch’ approach rather than making a complete U-turn. There continues to be uncertainty in the global economy and the underlying scenario is fast changing. This will make the flows from FPIs volatile,” said Himanshu Srivastava, associate director (manager research), Morningstar India.

According to the data with depositories, Foreign Portfolio Investors (FPIs) invested a net amount of Rs12,262 crore in Indian equities in August. This figure includes investment through the primary market and bulk deals, which have been gathering momentum recently. This is the lowest investment in the last four months. Before this investment, FPIs invested over Rs40,000 crore each in the past three months in Indian equities. The net inflow by FPIs was at Rs46,618 crore in July, Rs47,148 crore in June, and Rs43,838 crore in May. Before that, the inflow amount was Rs11,631 crore in April and Rs7,935 crore in March, data with the depositories showed. Srivastava attributed the slowdown in FPI investment in August to concerns on the global macroeconomic front, with higher crude oil prices and resurfacing of inflation risks. Additionally, firming up of bond yields in the US would have also led some foreign investors to drift away from riskier markets in favour of greater certainty and better risk-reward profile offered by US treasuries, he said.

Also, the intermittent rally in the Indian equity markets could have resulted in its valuation going beyond the comfort level of a few investors, he added. “FPIs have been sellers in most emerging markets in August mainly due to this double whammy of rising dollar and rising bond yields.