Foreign Port­fo­lio In­vestors In­fuse .₹ 14,600 crore So Far This Month

Clar­ity on cap­i­tal gains tax & tax on in­di­rect trans­fers spurred in­flow

The Economic Times - - Finance & Commodities -

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 Fundsin­ 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.

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