Foreign Portfolio Investors Infuse .₹ 14,600 crore So Far This Month
Clarity on capital gains tax & tax on indirect transfers spurred inflow
New Delhi: Overseas investors have pumped in over .₹ 14,600 crore into the Indian capital markets this month so far, enthused by clarity on foreign portfolio investors’ taxation.
The latest inflow followed a net pullout of .₹ 80,310 crore from equity and debt together in the past four months (October-January). Prior to that, FPIs had invested over .₹ 20,000 crore in the capital market in September 2016.
According to depository data, foreign portfolio investors (FPIs) infused a net sum of .₹ 9,359 crore in equities during February 1-23 and another .₹ 5,279 crore in the debt segment, translating into a total inflow of .₹ 14,638 crore. The net inflow may increase further as two trading sessions are still left in this month, experts believe.
“After being net sellers in January 2017, FPIs pumped in funds post-Budget, especially after they received clarity on capital gains taxation as well as tax on indirect transfers,” Vidya Bala, head, mutual fund research at Fundsindia.com said.
“Also, the demonetisation fears did not reflect much in the earnings numbers which could also be one more reason for FPIs to repose faith in the Indian markets. A lesser than painful demonetisation impact and the confidence arising from digitisation and resulting transparency could see FPIs viewing Indian markets more seriously,” she added.
Besides, the no rate cut stance has caused some dips in the price of debt instruments (as yields moved up) offering opportunities for buyers, Bala said.