FPI investment to top Rs 2 lakh crore in FY18: ICRA
Foreign portfolio investors are expected to end the current fiscal year with net investments of about
The Rs 1.8-2.2 lakh crore ($ 28 to 35 billion) for FY2018 as compared with Rs 95,600 crore ($ 15 billion) in the first half FY18 and Rs 48,400 crore ($7 billion) in FY17.
“FPI investments in the current fiscal have been driven by the debt segment which received a net inflow of Rs 1.17 lakh crore during eight months of FY’2018 with positive net inflows across all months” Karthik Srinivasan, Senior Vice President and Group Head – Financial Sector Ratings, Icra. “Supported by healthy inflows, the utilisation of the FPI investment limit in G-secs and corporate debt increased in the current fiscal despite an enhancement in the permissible investment limits. The equity segment, however, witnessed a net outflow of FPI investment during the August and September amidst concerns on earnings growth, rising valuations and slowing GDP growth.” Srinivasan added.
While the enhancement in FPI limits has reinvigorated the pace of inflows into the debt market, the trend is expected to moderate in the coming months, given the high utilization levels for G-sec and corporate bonds. Further, the recent rate hike by United States Federal Reserve Bank (US Fed) in December 2017, the ongoing balance-sheet trimming by the United States (US) Government and the passage of the Tax Cuts and Jobs Act of 2017 have pushed up treasury yields in the US.
This has in-turn contributed to a spike in yields for Indian debt securities, which would help to maintain their relative attractiveness for international investors. Icra expects the debt segment to register net FPI inflows of Rs. 1.5 to 1.6 lakh crore ($24 to 26 billion) in FY18.
FPI equity inflows would remain dependent on the pace of economic growth and the strength of the recovery in corporate earnings. Icra expects Rs 27,000-59,000 crore ($4-9 billion) of FPI inflows into equity in 2018.
Also, another notable feature is that the number of foreign portfolio investor (FPI) registrations with the Securities and Exchange Board of India (SEBI) has surged in the past couple of years, with over 4,500 FPIs registered between April 2016 and October 2017 including 1,064 in the current fiscal.
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Via:: Economic Times – Stocks