FPI flows to still remain under pressure: Ind-Ra

FPI flows to still remain under pressure: Ind-Ra

India Ratings and Research. (Photo: Facebook/@indiaratings)

Mumbai, Sep 4 (IANS) Credit rating agency India Ratings and Research (Ind-Ra) on Wednesday said that foreign portfolio investment (FPI) flows into India are expected to remain under pressure over the near-to-medium term.

The agency expects hindrance to FPI flows despite the accommodative global monetary policy stance and the Central government's efforts to alleviate uncertainty regarding the higher surcharge.

According to the agency, a gamut of factors, such as slower-than-expected demand growth in major economies, geopolitical and trade tensions and a gradual weakening of the economic growth prospects in India, have contributed to a build-up of risk aversion, which has impeded the demand for emerging market (EM) debt instruments.

"Notwithstanding a series of rate cuts by the Reserve Bank of India and the softening of government security yields to a five-year low, the corporate spread over the benchmark has only widened," the agency said.

"As the banking system struggles to ensure transmission of the repo rate cuts amidst high deposit competition and low risk appetite, the demand for corporate debt instruments has remained lacklustre in FY20."

--IANS

rv/vd