As concerns about an impending rate hike in the US arise, foreign portfolio investment flows (FPIs) into Indian markets have decreased in August following a strong inflow from April to July, according to a report by Mint.

This led to higher bond yields and a stronger dollar. August saw the weakest inflows since February. Due to worries about a rate hike, emerging countries have begun to pull out.

The portfolio flow data is inclusive of investments made on the primary market and in wholesale transactions. After three months of nonstop buying in the cash market, foreign portfolio investors (FPIs) were net sellers, Mint cited VK Vijayakumar, chief investment strategist at Geojit Financial Services.

According to Vijayakumar, the main factor driving FPIs to sell in the cash market has been the rise in US bond yields and the strength of the dollar index, both of which are detrimental to capital inflows. He said that the financial industry’s profit-booking practices also played a role in the selling by FPIs.

Mint cited Siddharth Khemka, head of retail research at Motilal Oswal Financial Services Ltd., who maintained that, the uncertainty is likely to persist. “There is no clear trend. Uncertainty has increased with no clear indication of the US Federal Reserve’s outlook from US jobs data. The China factor remains another major concern,” Khemka told Mint.

However, block agreements and private equity fund investments show that there is still significant wide market activity. According to analysts, market demand is still quite high as evidenced by subscriptions to initial public offerings (IPOs). Despite their positivity, the market trend is expected to continue to be erratic.

Another rate increase will affect the currency and liquidity, and there are negative risks, according to Khemka.

India is presently facing threats over rising oil prices and uncertainty, raising concerns.

“Currency volatility is again a major risk, and dry weather conditions in September could also add to concerns,” &nbsp;Vikram Cassatt, head of advising at Prabhudas Lilladher Pvt Ltd told Mint. He also pointed out that there may be additional variables, such as inflation rates.

Nishit Master, a portfolio manager at Axis Securities PMS, mentioned that depreciation in rupee versus dollar valuation arbitrage, which could push flows to the Chinese market because it is less expensive, as well as potential increases in energy prices and inflation, are factors that could have a “not very positive” impact on FPI flows in the short term.

On brighter side, FPIs have been selling in the majority of emerging economies in August, primarily as a result of the strengthening dollar and declining bond yields. However, they have performed well in India as compared to other rising markets.

According to Cassatt, Malaysia is the only other Asian market that has had inflows that are higher than those of China, South Korea, and a number of other nations that have experienced significant outflows.

“India can continue to outperform other emerging markets,” Cassatt said.

In terms of economic growth, India is doing well. The robust profit trajectory seen during the first quarter also helped to underpin the markets.

According to Master, the majority of developed markets, including the US, Japan, and the EU (European Union), are either experiencing a recession or have relatively poor growth rates. Even China’s growth has fallen short of market estimates and is predicted to continue to be weak moving forward.

The only big country that would experience substantial growth and draw FPI inflows in such a case is India, according to Master.

Master predicts that FPIs would continue to pour into India despite the dearth of investment prospects.

&nbsp;

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As concerns about an impending rate hike in the US arise, foreign portfolio investment flows (FPIs) into Indian markets have decreased in August following a strong inflow from April to July, according to a report by Mint.

As concerns about an impending rate hike in the US arise, foreign portfolio investment flows (FPIs) into Indian markets have decreased in August following a strong inflow from April to July, according to a report by Mint. This led to higher bond yields and a stronger dollar. August saw the weakest inflows since February. Due to worries about a rate hike, emerging countries have begun to pull out. The portfolio flow data is inclusive of investments made on the primary market and in wholesale transactions. After three months of nonstop buying in the cash market, foreign portfolio investors (FPIs) were net sellers, Mint cited VK Vijayakumar, chief investment strategist at Geojit Financial Services. According to Vijayakumar, the main factor driving FPIs to sell in the cash market has been the rise in US bond yields and the strength of the dollar index, both of which are detrimental to capital inflows. He said that the financial industry’s profit-booking practices also played a role in the selling by FPIs. Mint cited Siddharth Khemka, head of retail research at Motilal Oswal Financial Services Ltd., who maintained that, the uncertainty is likely to persist. “There is no clear trend. Uncertainty has increased with no clear indication of the US Federal Reserve’s outlook from US jobs data. The China factor remains another major concern,” Khemka told Mint. However, block agreements and private equity fund investments show that there is still significant wide market activity. According to analysts, market demand is still quite high as evidenced by subscriptions to initial public offerings (IPOs). Despite their positivity, the market trend is expected to continue to be erratic. Another rate increase will affect the currency and liquidity, and there are negative risks, according to Khemka. India is presently facing threats over rising oil prices and uncertainty, raising concerns. “Currency volatility is again a major risk, and dry weather conditions in September could also add to concerns,” Vikram Cassatt, head of advising at Prabhudas Lilladher Pvt Ltd told Mint. He also pointed out that there may be additional variables, such as inflation rates. Nishit Master, a portfolio manager at Axis Securities PMS, mentioned that depreciation in rupee versus dollar valuation arbitrage, which could push flows to the Chinese market because it is less expensive, as well as potential increases in energy prices and inflation, are factors that could have a “not very positive” impact on FPI flows in the short term. On brighter side, FPIs have been selling in the majority of emerging economies in August, primarily as a result of the strengthening dollar and declining bond yields. However, they have performed well in India as compared to other rising markets. According to Cassatt, Malaysia is the only other Asian market that has had inflows that are higher than those of China, South Korea, and a number of other nations that have experienced significant outflows. “India can continue to outperform other emerging markets,” Cassatt said. In terms of economic growth, India is doing well. The robust profit trajectory seen during the first quarter also helped to underpin the markets. According to Master, the majority of developed markets, including the US, Japan, and the EU (European Union), are either experiencing a recession or have relatively poor growth rates. Even China’s growth has fallen short of market estimates and is predicted to continue to be weak moving forward. The only big country that would experience substantial growth and draw FPI inflows in such a case is India, according to Master. Master predicts that FPIs would continue to pour into India despite the dearth of investment prospects. WATCH WION LIVE HERE

Uncertainty surrounding India's FPI likely to continue as it hits its six-month low: Report

In the wake of a revision in the Know Your Client (KYC) norms and eligibility conditions for Foreign Portfolio Investors (FPIs), Department of Economic Affairs (DEA) Secretary Subhash Chandra Garg said an increase in FPIs would take place, which would have a positive impact on capital inflow and the current situation of the Indian Rupee.

"In April, the Securities and Exchange Board of India (SEBI) had come out with a circular for Persons of Indian Origin (PIOs) and Non-resident Indians (NRIs) who dealt with investments via asset management companies. However, there were some issues with the norms mentioned in this circular. Soon after, the SEBI constituted a committee and looked into the grievances of these people and released a new circular. I feel that now, investors will enthusiastically enter the market once again. Also, an increase in FPIs positively impacts capital inflow and the Rupee," Garg told ANI.

The market regulator on Friday announced a revision in the KYC norms for FPIs, taking cognisance of the recommendations of the SEBI Working Group headed by HR&nbsp;Khan.

As per the new norms, NRIs and Overseas Citizens of India (OCIs) shall have the same meaning as assigned to them under regulation 2 of the Foreign Exchange Management (Transfer or issue of security by a Person Resident outside India) Regulations, 2017, the SEBI noted.

NRIs, OCIs and Resident Indians (RIs), the SEBI noted, can be constituents of FPIs, if the contribution made by them, including those of NRI/ OCI/ RI controlled investment managers (IMs), is below 25 per cent from a single NRI/ OCI/ RI and in aggregate, below 50 per cent to corpus of FPI. The SEBI also stated that NRIs/ OCIs/ RIs should not be in control of FPIs.

As per the latest norms, FPIs can be controlled by IMs which are controlled and/or owned by NRIs/ OCIs/ RIs if IMs are appropriately regulated in their home jurisdiction and are registered with the SEBI as non-investing FPIs; or an IM is incorporated or set up under Indian laws and appropriately registered with the SEBI.

Furthermore, a non-investing FPI may be directly or indirectly fully owned and/or controlled by an NRI/ OCI/ RI. The restriction that NRIs/OCIs/RIs should not be in control of

FPIs, the SEBI said, will not apply to FPIs which are 'offshore funds' for which a no-objection certificate has been provided by the Board in terms of SEBI (Mutual Funds) Regulations, 1996.

Existing FPIs and new applicants shall be given a time period of two years from the date of coming into force of the amended regulations or from the date of registration, whichever is later, in order to satisfy these eligibility conditions. In case of temporary breach, a time period of 90 days will be given to ensure compliance with the prescribed conditions, the SEBI said.

In the wake of a revision in the Know Your Client (KYC) norms and eligibility conditions for Foreign Portfolio Investors (FPIs), Department of Economic Affairs (DEA) Secretary Subhash Chandra Garg said an increase in FPIs would take place, which would have a positive impact on capital inflow and the current situation of the Indian Rupee.

In the wake of a revision in the Know Your Client (KYC) norms and eligibility conditions for Foreign Portfolio Investors (FPIs), Department of Economic Affairs (DEA) Secretary Subhash Chandra Garg said an increase in FPIs would take place, which would have a positive impact on capital inflow and the current situation of the Indian Rupee. "In April, the Securities and Exchange Board of India (SEBI) had come out with a circular for Persons of Indian Origin (PIOs) and Non-resident Indians (NRIs) who dealt with investments via asset management companies. However, there were some issues with the norms mentioned in this circular. Soon after, the SEBI constituted a committee and looked into the grievances of these people and released a new circular. I feel that now, investors will enthusiastically enter the market once again. Also, an increase in FPIs positively impacts capital inflow and the Rupee," Garg told ANI. The market regulator on Friday announced a revision in the KYC norms for FPIs, taking cognisance of the recommendations of the SEBI Working Group headed by HR Khan. As per the new norms, NRIs and Overseas Citizens of India (OCIs) shall have the same meaning as assigned to them under regulation 2 of the Foreign Exchange Management (Transfer or issue of security by a Person Resident outside India) Regulations, 2017, the SEBI noted. NRIs, OCIs and Resident Indians (RIs), the SEBI noted, can be constituents of FPIs, if the contribution made by them, including those of NRI/ OCI/ RI controlled investment managers (IMs), is below 25 per cent from a single NRI/ OCI/ RI and in aggregate, below 50 per cent to corpus of FPI. The SEBI also stated that NRIs/ OCIs/ RIs should not be in control of FPIs. As per the latest norms, FPIs can be controlled by IMs which are controlled and/or owned by NRIs/ OCIs/ RIs if IMs are appropriately regulated in their home jurisdiction and are registered with the SEBI as non-investing FPIs; or an IM is incorporated or set up under Indian laws and appropriately registered with the SEBI. Furthermore, a non-investing FPI may be directly or indirectly fully owned and/or controlled by an NRI/ OCI/ RI. The restriction that NRIs/OCIs/RIs should not be in control of FPIs, the SEBI said, will not apply to FPIs which are 'offshore funds' for which a no-objection certificate has been provided by the Board in terms of SEBI (Mutual Funds) Regulations, 1996. Existing FPIs and new applicants shall be given a time period of two years from the date of coming into force of the amended regulations or from the date of registration, whichever is later, in order to satisfy these eligibility conditions. In case of temporary breach, a time period of 90 days will be given to ensure compliance with the prescribed conditions, the SEBI said.

Surge in Foreign Portfolio Investments will impact rupee positively: Economic Affairs Secretary

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Uncertainty surrounding India's FPI likely to continue as it hits its six-month low: Report

Surge in Foreign Portfolio Investments will impact rupee positively: Economic Affairs Secretary