HDFC Bank counter powers FPI inflows into India to $1.4 bn in 2017

Foreign portfolio investors (FPIs) have bought stocks worth $1.4 billion so far in 2017, thanks to some big purchases in the HDFC Bank counter. That’s nearly half the amount of $ 2.9 billion that overseas investors pumped into the equity markets in 2016. Among India’s peer markets, Taiwan and Brazil have attracted the most foreign money so far this year. While Taiwan has witnessed an inflow of $3.07 billion, Brazil has attracted $2.37 billion of foreign funds. South Korea pulled in $1.76 billion and Thailand received the least amount of foreign investor money at just $123.5 million.

Buying by foreign funds, supported by purchases of domestic funds, has made Indian equities one of the most attractive markets in the world. So far this calendar year, Sensex has yielded a return of 10.3% in dollar terms compared with an 18.33% return by Brazil-BOVESPA and an 11.05% return by Taiwan TAIEX.

Shares of HDFC Bank rose to a record high last Friday with record volumes after Reserve Bank of India (RBI) removed the restriction on FPIs from picking up additional stakes in the lender. On Friday alone FPIs bought equities worth $1.2 billion – the highest single day purchase since April 21, 2015, Bloomberg data showed.

The big demand for shares of HDFC Bank, the world’s most expensive bank if one goes by the price to book value multiple it trades at, is driven by the bank’s performance and track record. The bank has the cleanest loan book in the business; gross non-performing assets (NPA) as a percentage of total loans, stood at 1.05% at the end of December 2016.

HDFC Bank