At $36 bn, FPI inflows into equities at record high since FY13: RBI report

On the other hand, net foreign direct investment inflows jumped to $44 billion, till end January, up from $36.3 billion a year ago, driven by the massive inflows in November and December, with the last month of the yr getting a record $6.3 billion.

January due to lower inflows into equities, shows the latest data from the March issue of RBI Bulletin released over the weekend. “Foreign portfolio investors (FPIs) made net purchases in the equity segment so far this fiscal, while have been net sellers in the debt market during the period.

Cumulatively, FPIs have pumped in a record $36 billion into equities so far this fiscal up to March 10, which is the highest since FY13,” says the bulletin.

The report further notes that the quality of FPI inflows improved during the period as category-I foreign investors, comprising central banks, sovereign wealth funds, pension funds, regulated entities and multilateral organisations, increased their stake to a high 95% of total equity assets at end-February compared with 87% at end-December 2019.

Based on depositories data, FPIs were net buyers of equities so far in March at ₹8,642 crore. FPIs poured in ₹14,202 crore into equities however pulled out ₹5,560 crore from debt segment between March 1 and 19, leaving net funding to ₹8,642 crore.

Prior to this, overseas investors had invested ₹23,663 crore in February and ₹14,649 crore in January, on a net basis.

In response to analysts, domestic equities are attractive for foreign investors due to the higher returns. Also a rejig in a number of the global indices has led to net inflows into domestic equities.

There is a gush of liquidity in the global financial markets after US announced a USD 1.9 trillion pandemic relief package, which ensured regular flow of assets into emerging markets like ours.

Except India, most Asian and emerging markets have seen FPI outflows. Taiwan has witnessed the highest FPI outflows this month at $4.5 billion. This calendar year to date, South Korea and Taiwan have seen FPI outflows of $11 billion and USD 7 billion, respectively.

In the meantime, the RBI stated the foreign exchange reserves at $580.3 billion as of March 5– down from the all-time high of $590.2 billion on January 29, 2021, is equivalent to 18.2 months of imports.

The country saw a 60% enhance in fintech investments and surpassed China by clocking 33 fintech fundraising deals worth $647.5 million.

In February alone, fundraising by the fintech sector increased 46% to $200 million, as against $137 million a year in the past, on account of the pandemic-fuelled proliferation of digital payments, the report stated.