The overall net inflow of foreign investor funds has made 2017 the best period in three years for India’s capital markets — both equity and debt — with combined net inflows of over $30 billion. Banking, housing finance, and the auto industry sectors have seen consistent foreign portfolio inflows. The higher inflow in 2017 can be attributed to the expectation of a rise in domestic economic growth, experts said.
As the year draws to a close, the Indian stock market seems to have regained its status as one of the most favored destinations for foreign portfolio investors, reports Business Today. However, market analysts believe that foreign portfolio flows may not continue in 2018 with the withdrawal of liquidity and rate hikes in developed economies picking up. Additionally, the inflation cycle is likely to turn following an increase in commodity prices and a recovery in consumption demand.
Dinesh Rohira, founder and chief executive at 5nance.com said that business sentiment among companies has improved because of India’s ‘ease of doing business’. The government’s commitment in speeding up development and economic reforms before going for elections in 2019 bodes well for foreign investors’ confidence, he added. The government’s decision to recapitalize state-owned banks is also expected to enhance lending and propel economic growth.
