The following article is based on my own interpretation of the said events. Any material borrowed from published and unpublished sources has been appropriately referenced. I will bear the sole responsibility for anything that is found to have been copied or misappropriated or misrepresented in the following post.
Saikat Pal, MBA 2014-16, Vinod Gupta School of Management, IIT Kharagpur
The Indian equity and debt markets have seen considerable amount of action from foreign investors lately. In the year 2014-15 the equity markets saw net investment of INR 1.1 lakh crore and the debt markets INR 1.64 lakh crore, a total of INR 2.74 lakh crore having been infused into the Indian capital markets by the foreign investors. This takes the cumulative net investment (debt+equity) figure by foreign investors to beyond INR 11 lakh crore (equity markets allowed foreign investment only since 1992).
These investors who have been rechristened as Foreign Portfolio Investors have been one of the key drivers of the latest rally in the Indian markets of late, as reported by NDTV Profit recently. Analysts attribute this huge inflow of capital to Indian markets to the revival of a strong sentiment of economic reforms under the present government augmented by a sharp decline in interest rates. Experts also are optimistic about this trend continuing owing to the provisions set forth in this year’s Union Budget (like GAAR etc).