Excess liquidity, attractive valuations and weakness in the US dollar propelled foreign investors to flock to the Indian stock market in a big way with the highest-ever net inflow of Rs 1.4 lakh core in 2020, but they also dumped debt securities worth a record amount amid pandemic-driven stress in the economy.

The foreign portfolio investors (FPIs) have made a net outflow of a little over Rs 1 lakh crore in 2020 so far, though hybrid instruments witnessed a net inflow of more than Rs 10,000 crore, as per the latest data available with depositories. The market men expect a similar trend to continue for a few months unless there is a major change in the overall investment scenario. "With some major developments on COVID-19 vaccine front, India stands to benefit.

Also, growth in the economy will improve investor sentiments and their outlook towards India. From the risk-reward profile perspective, these aspects make India a good investment destination," said Himanshu Srivastava, Associate Director - Manager Research, Morningstar India. As the year 2020 draws to a close, the FPIs have so far made a net inflow of Rs 1.42 lakh crore -- the highest level of such investment in a calendar year since 2002. This is the fifth time in history when net investment by foreign investors in equities has crossed Rs 1 lakh crore mark in a year.

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