FIIs turned buyers in October after 5 months

Foreign investment may remain upbeat as the US federal reserve has cut interest rate, for the third time this year in a move to ensure the US economy weathers a global trade war without slipping into a recession.

Mumbai: With the purchase of Indian equities worth Rs 8,596 crore in the month of October, Foreign Portfolio Investors were net buyers last month after five-month of pulling out funds owing to growth concerns.

Foreign investment may remain upbeat as the US federal reserve has cut interest rate, for the third time this year in a move to ensure the US economy weathers a global trade war without slipping into a recession.

The heavy outflow of foreign funds was witnessed between May to September amid concerns of growth and relentless negative news flow like the sharp decline in auto and FMCG sales which indicated at a massive consumption slowdown.

Provisional data showed that FIIs sold Rs 6,624.05 crore worth of stocks in September, Rs 14,828.76 crore in August, Rs 16,870.13 crore in July, Rs 688.50 crore in June and Rs 2,135.85 crore in May 2019.

Historically the inflow of foreign funds have powered markets to fresh highs and caused a sharp decline in case of there exit. The benchmark Sensex also peaked at 40,392.22 on October 31 over the strong inflow of foreign funds which came after improvement in quarterly earning results owing to the corporate tax cut.

Investor sentiments are up to post reports of better-than-expected festive sales, decent earnings season so far, hopes of stimulus from the government including further tax reforms continued FIIs inflow and fall in oil price kept market sentiments positive, said Siddhartha Khemka of Motilal Oswal Financial Services.

Khemka said that with FII participation, broader markets have also started performing which should continue next week as well.

Institutional investment from abroad is especially significant as it not only is fruitful for equities but also for the currency.