A significant piece of news has been making stock market headlines lately — the return of foreign investors! Yes, Foreign Portfolio Investors (FPIs) are once again pouring money into the Indian equity market. According to reports, FPIs made record investments in the Indian share market during FY24.
Let’s read this article to learn more about the FPI flow in the Indian stock market and what it means for investors.
What’s Happening?
According to data from Moneycontrol, Foreign Portfolio Investors (FPIs) are reinvesting in India. In FY2023-24, FPIs invested a net amount of Rs 2.08 lakh crore in equities and Rs 1.2 lakh crore in the debt market. This marks a significant shift compared to the past two years when FPIs withdrew investments from India. One of the major reasons for this change is India’s strengthened economic position compared to other countries.
As per Financial Express, in the previous two financial years, i.e., FY22 and FY23, Foreign Investors (FPIs) withdrew Rs 1.7 trillion from the Indian market. This was due to higher valuations and rising interest rates, which compelled them to withdraw their money amidst the world’s fastest-growing economy.
Here’s a look at the investment flow into the Indian equity and debt markets in 2023.
Trends in 2024
According to The Economic Times, while the trend of foreign investors (FPIs) may have been somewhat volatile, in March, FPIs purchased shares worth a total of Rs 35,098 crore. Capital goods, automobiles, financials, telecom, and real estate have witnessed the highest demand. However, there has been some weakness observed in the last two months. Overall, in 2024 so far, FPIs have made a net investment of Rs 10,893 crore in the Indian equity market.
What Does it Mean for Investors?
FPI investment in the Indian stock market can bring several benefits to investors, including:
Liquidity: FPI investments increase liquidity in the Indian share market, making it easier for investors to buy and sell shares.
High Returns: The Indian stock market has historically provided excellent returns. FPI investment can help sustain this trend.
Potential Market Upsurge: As foreign investment in the Indian capital market grows, its impact is felt across the entire stock market. Increasing FPI investment in India can be a positive signal for investors.
What’s Next?
As per Financial Express, both Nifty 50 and Sensex have touched their all-time highs. Analysts believe that due to higher valuations and upcoming elections, FPI inflows may decrease in the near future.
According to The Hindu, looking ahead, Bharat Dhamani, Managing Partner at Mazars in India, anticipates that the continued investment of Foreign Portfolio Investors (FPIs) is likely due to economic reforms, stability, and attractive investment opportunities. However, he also advises that global geopolitical turbulence could create fluctuations in the market.
That’s it for today. We hope you’ve found this article informative. Remember to spread the word among your friends. Until we meet again, stay curious!
*The article is for information purposes only. This is not an investment advice.
*Disclaimer: Teji Mandi Disclaimer
