Analysts expect inflows to accelerate further going ahead following the passage of the Insurance Bill in Parliament and assurances in the Union Budget to revisit controversial issues like General Anti-Avoidance Rule (GAAR).
Overseas investors have pumped in nearly Rs 14,000 crore into the Indian capital markets within a fortnight of this month, taking the total inflow to around Rs 72,000 crore since the beginning of the year.
The analysts expect the inflows to accelerate further going ahead following the passage of the Insurance Bill in Parliament and assurances in the Union Budget to revisit controversial issues like General Anti-Avoidance Rule (GAAR). The Foreign Portfolio Investors (FPIs) have bought shares worth a net Rs 9,134 crore during March 2-13, while in the debt segment, their net inflows stand at Rs 4,567 crore, taking the total to Rs 13,706 crore (USD 2.2 billion), as per the data compiled by the Central Depository Services Ltd.
The latest inflow takes the foreign investments in the country’s capital markets (equity and debt segments) to Rs 71,958 crore (USD 11.63 billion) so far this year. Market participants attributed the robust inflows to positive investor sentiment driven by the government’s announcement of several reform measures. Experts further said that inflows will continue in the coming months because of the passage of the Insurance Bill in the Rajya Sabha last week as many foreign investors are keen on partnering in insurance businesses.
Besides, Finance Minister Arun Jaitley announced a slew of measures to attract overseas investment in the country in his Union Budget. In 2014, the net investment by overseas investors in debt markets was Rs 1.59 lakh crore, while the figure for equities stood at Rs 97,054 crore. Overall net investment by foreign investors stood at Rs 2.56 lakh crore last year.
To soothe investors’ nerves, Jaitley had deferred the controversial GAAR by two years, saying that its immediate applicability can create ‘panic’ in markets.