Mumbai: Bucking the trend of selling in most emerging market equities, foreign fund managers have been buying in India in August.
The chief reason is the sensex that was rising through the month, prompting mainly exchange-traded funds (ETFs) to buy in the domestic market.
Official data showed that in August, net inflow by foreign portfolio investors (FPIs) was more than Rs 47,000 crore — a record in over a decade. In the last three months, total net FPI inflows have been nearly Rs 80,000 crore. However, because of a net outflow of nearly Rs 62,000 crore in March when the benchmark indices had fallen sharply soon after the Covid-19 outbreak was declared a global pandemic, the net inflows for 2020 is at about Rs 36,100 crore, data from CDSL showed.
Institutional dealers said that ETFs managed from abroad and registered as FPIs in India have the mandate to follow a preset benchmark like the Nifty, sensex or some other index. So if the ETF’s benchmark goes up, the fund manager has to buy, and sell when the benchmark slides.
With the sensex rising above the 39k mark after six months and above 40k on Monday during the day’s session after more than six months, these FPIs had to buy Indian stocks and thus added to the total FPI net inflow figure. On Monday, however, FPIs showed a net outflow as the indices fell sharply.