At a time when uncertainty looms large on equity market – global as well as domestic front – due to the COVID-19 pandemic, data on FPI equity inflows gives hope. As per a report by ICICI Securities, FPI equity inflows in August 2020 so far stand at nearly $6 billion, which is close to the highest monthly number in history. “The inflow is significantly higher than other EM markets and will boost sentiments towards India,” said the brokerage. At first glance, it appears that the excess liquidity in global markets found its way to emerging markets like India. ICICI pointed out that given the likely current account surplus situation in 2020, the RBI has been buying excess dollar inflows to avoid sharp movements in the rupee, resulting in forex reserves hitting $535 billion. This has resulted in improving rupee liquidity, which continues to be at a significant surplus of Rs 6.5 trillion. This may underpin the bullish sentiment in the market and may push markets into bubble territory and increase momentum in broader markets, ICICI Securities said. On the front of FDI, inflows to India were flattish in FY18 & FY19 at $45 billion. This trend has improved in FY20 to $50 billion in spite of COVID.

(Moneycontrol)