Foreign Investors Not Deterred By Covid-19, Pour Record Amount In Equities

Cheap stock valuations in the aftermath of Covid-related lockdown and gush of liquidity infused by central banks helped foreign investors pour money into Indian stocks, analysts said.

Foreign Investors Not Deterred By Covid-19, Pour Record Amount In Equities

Foreign institutional investors have bought shares worth over Rs 1.50 lakh crore so far this year.

Indian economy's worst contraction on record amid coronavirus pandemic did not deter the foreign institutional investors from buying equities in the country's markets albeit they poured record amount in a pandemic-hit year. So far this year, the foreign institutional investors have bought shares worth over Rs 1.50 lakh crore ($20.59 billion) data from National Securities Depository Limited (NSDL) showed. This was the highest-ever money invested in Indian stock markets by FIIs ever in a calendar year and highest since 2010 when they invested Rs 1.33 lakh crore in equity markets.

Buying by FIIs have propelled the Indian equity benchmarks - Sensex and Nifty to new all-time highs.

FII Investment Trend

Calendar yearFII investment amount (in Rs crore)
20023,629.6
200330,458.8
200438,965.1
200547,181.1
200636,539.7
200771,486.5
2008-52,987
200983,423.9
20101,33,266
2011-2,714.3
20121,28,359.8
20131,13,136
201497,054
201517,808
201620,568
201751,252
2018-33,014
20191,01,122
20201,52,455*

Source: NSDL

*FII investment till December 16, 2020

Cheap stock valuations in the aftermath of Covid-related lockdown and gush of liquidity infused by central banks helped foreign investors pour money into Indian stocks, analysts said.

"Cheap valuations and easy liquidity because of central banks opening their purses across the globe helped India get highest foreign investment in Asia," AK Prabhakar, head of research at IDBI Capital, told NDTV.

Labour and farm reforms and production-linked incentive schemes announced by the government under the Atma Nirbhar Bharat Scheme also reinforced foreign investors' confidence for Indian equities.

"Post Covid FIIs feel India will have a better advantage and India will gain market share in many sectors. Reform process like farm and labour reforms and PLI scheme in many sectors also makes FIIs bullish on India," Mr Prabhakar added.

Not only foreign institutional investment, the country also received huge foreign direct investment (FDI) flows during the pandemic time.

At the height of the COVID-19 pandemic, during the first nine months of the year, the country attracted $40 billion in foreign direct investment which was up by about 13 per cent, Commerce and Industry Minister, Piyush Goyal said.

FDIs into India have been continuously growing as the country has one of the most facilitative policies to attract overseas investors, Mr Goyal added.