FPI inflows dip to $2 billion in Q1

Investment by foreign investors in the Indian equity markets sharply declined to $2.12 billion in the quarter ended June 30 from $6 billion in the preceding three months on global and domestic concerns. However, the value of total FPI investments in Indian equities rose to $383 billion in the AprilJune quarter, higher than the $366 billion in the previous three-month period, according to a report by Morningstar Investment Adviser India. This is the highest level of foreign investments into Indian equities in a quarter since 2012.

According to the report, FPIs’ contribution to the Indian equity market capitalisation stood at 20 per cent during the period under review. The report attributed quarterly decline in FPI inflow to the cautious stance maintained by them throughout the quarter on the back of some concerns on the global as well as domestic front.

“Growing geopolitical concerns in Syria, Afghanistan and North Korea injected an element of uncertainty in the initial part of the quarter, which prompted FPIs to hedge risks. Given emerging markets are more susceptible to such uncertainties, they restrained their investments into Indian markets. As a result, FPIs were net buyers of equities worth $0.37 billion in April,” Himanshu Srivastava, senior analyst manager research, at Morningstar said.