One of the prime reasons for FPIs to take the primary route is its ample liquidity which enables buying in large quantities without significant impact cost. The rights issue of Reliance Industries (RIL) was another reason since the first instalment of about Rs 13,000 crore towards the subscription was through the primary market. FPIs hold around 24% stake in RIL.
FPIs have been net buyers of $ 3.79 billion (Rs 27,459 crore) of equity in the primary market while they have sold $ 6.2 billion (Rs 45973 crore) of equity in the secondary market since the beginning of 2020. On a cumulative basis, the FPI sold $ 2.8 billion of Indian equities during the period. With an inflow of $ 4.8 billion (Rs 36,400 crore) in the past two months, Indian equities have recouped more than half of the outflow between March and April.
The primary market has served as a major route of investment for FPIs. Of the total FPI investment of $ 18.4 billion (Rs 1.4 lakh crore) in the past four and a half years in Indian equities, the stock exchange route received an inflow of measly $ 138 million (Rs 1,035 crore) while the rest was through the primary route, according to NSDL data.
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