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 ₹ 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 ₹ 1.33 lakh crore in equity markets.
Buying by FIIs have propelled the Indian equity benchmarks – Sensex and Nifty to new all-time highs.
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.
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.