Foreign portfolio investors (FPIs) were a net buyer for June 2019, making an investment of Rs 13,111 crore in Indian securities market, up 13 per cent from Rs 11,370 crore in the preceding month. FPIs are foreign entities investing in Indian stocks, bonds, and other such instruments. As per data from the Securities and Exchange Board of India, they have remained net buyers for five straight months - FPIs last turned net sellers in January 2019.
It remains to be seen whether Finance Minister Nirmala Sitharaman's proposal in the Budget to hike surcharge on income tax for wealthy individuals, including foreign funds which are structured as non-corporate entities, have dented their enthusiasm for Indian equities.
According to experts, FPIs can choose to either come as a non-corporate entity or as a corporate. Around 2,000 of them, or 40 per cent of the total pie, automatically come under the new tax rate as they have been investing as a non-corporate entity, which are classified as an individual for the purpose of taxation. As per the latest depositories data, FPIs have been net sellers in July so far at over Rs 13,000 crore, the highest pullout since last October.
In June, "FPIs invested Rs 2,596 crore in equity securities, Rs 8,319 crore in debt securities and Rs 2,196 crore in hybrid securities," read the latest Securities and Exchange Board of India Bulletin for July. Interestingly, in May, the investment in equity securities was much higher at Rs 7,920 crore while that in debt securities had stood at just Rs 1,187 crore.
FPIs' assets, as reported by the custodians, stood at Rs 33,81,730 crore in end-June, out of which the notional value of offshore derivative instruments (including ODIs on derivatives) was Rs 81,092 crore.