FIIs inflow increases in debt against equities in June

The month of June witnessed a hike in net investments to the extent that the net investments overpowered the equity in flows in India. The capital inflow trend that has been observed since the past few months is expected to continue in the coming quarters as well, as the market experts speculate.    

The consistent performance of the Indian currency and high interest rate differentials between India and the US are sought as the major drivers of inflow in the debt market. While the Indian bonds faring better than its peers also hiked the preference for debt.        

June also witnessed a significant liquidity in the fixed income markets too with the foreign institutional investors pouring in USD 3.98 billion, 27 per cent higher against the FII inflows in May, 2017. The domestic investments also witnessed an increase of 61 per cent to Rs 153.13 billion.   

The FIIs’ net investments in equities fell by over 60 per cent to USD 610 million in June, with the DII also slipping by about 6 per cent to Rs 88.07 billion.

The weakened inflow in equities is also attributed to the uncertainty brought in the markets as the GST implementation was due, the corporates were witnessing insolvencies and there was a general profit booking trend in the market. The factors also reflected on the performance of the benchmark indices, that saw a monthly decline, for the first time in the calendar year, in June.