February 25, 2021

A ‘growth-friendly’ budget will increase sustainable recovery FPI inflows

Despite high estimates, foreign portfolio investors (FBI) have earned Rs 22,038 crore so far in February, following the February 1 federal budget presentation. Financial managers expect the FBI to keep pace with the economy on the path to recovery and reduce covid infections.

Despite the rise in share prices and the rise of the Sensex by more than 11 per cent in ten sessions, foreign investors held Rs 20,593 crore in equities and Rs 1,445 crore in the debt segment, bringing the total net investment to Rs 21,904 crore in February 1-12. DL) according to the data. They withdrew Rs 133 crore from hybrid projects. The FBI had a net investment of Rs 14,631 crore in January.

“We expect foreign flows to be positive in the fourth quarter, so far the budget is in favor of growth with privatization,” said S. Ranganathan, head of research at LKP Securities. Local companies have been sellers for the past two months. In the last two months of 2020, the FBI raised $ 8.5 billion. Domestic companies have been big sellers for four months now. Last month, they sold 37 1.37 billion shares.

“With the recovering economy, India is heading back to a higher nominal growth trajectory against the Western world (which continues to struggle with the second wave of covetousness and related locks) and is looking for a promising growth destination looking for developed global investors,” said Sorb Gupta, equity fund manager at Quantum Mutual Fund.

With computer cash flow, the Sensex has risen 11.36 per cent, or 5,258 points, to 51,544.30 since the budget was presented earlier this month.

According to Ranganathan, a number of reforms aimed at protecting shareholders’ rights will make business easier.

“FPIs have invested Rs 39,000 crore in Indian equities during CY2021. Sectors such as private banks, consumers, FMCG and IT have seen foreign inflows as Indian companies have shown a downturn and after lifting locking restrictions in the third quarter. In fact, over the past two months, FBI has invested Rs 1.70 lakh crore in Indian stocks, with a total investment of Rs 2.10 lakh crore from January 2020. Have crores.

Explained

The stock segment is highly profitable

Following the budget presentation, the stock markets were the biggest beneficiaries of foreign investment, with the FBI earning Rs 20,593 crore between February 1 and 12. The Sensex also gained significantly, or 11.36 per cent, or 5,258 points, to 51,544.30 on the February 1 budget.

“India is now witnessing a very rapid post-coit recovery in emerging markets. The sharp and steady decline in govt epidemics in India is a clear positive for the FBI outlook, so future flows will be good as well. Investment strategist VK Vijayakumar said.

He added, “In 2020, the pharmaceutical sector was a preferred choice, and the sector performed well, while banking stocks performed well due to NPA concerns. Now, bank shares are being sought by FPIs again. ID shares are favorites with consistently high distribution. ”

Investment bankers expect the Reserve Bank to buy FBI credit if it exceeds the expected financial stimulus in the United States.

“It would be conservative to build foreign exchange reserves to prevent India from future epidemics of excessive cash flow and widening fiscal deficit. RBI Governor Shakti Kantha Das said, ‘In order to mitigate global leakage … (for India) there will be no other assistance, but currency handlers will be included in the list. , Except to create their own foreign exchange reserve buffers, ”said one bank. USA Global Research Report.