FPIs inject over Rs 2 lakh crore in FY24, marking a remarkable comeback

FPI investments 2024: Foreign investors have made a robust return by infusing more than Rs 2 lakh crore into Indian equities during the fiscal year 2023-24, buoyed by the country's resilient economic fundamentals amidst global uncertainties.

Looking ahead to FY25, Bharat Dhawan, Managing Partner at Mazars in India, expressed cautious optimism and expects sustained FPI inflows driven by progressive policy reforms, economic stability, and attractive investment opportunities. However, he stressed the importance of strategic planning and agility in navigating potential market volatility influenced by global geopolitical factors.

Naveen KR, a Smallcase manager and Senior Director at Windmill Capital, echoed a positive outlook for FY25 from an FPI perspective.

In the ongoing fiscal year 2023-24, Foreign Portfolio Investors (FPIs) have collectively invested approximately Rs 2.08 lakh crore in Indian equity markets and Rs 1.2 lakh crore in the debt market, as per data from the depositories.

This resurgence follows a period of net outflows from equities in the preceding two financial years. In 2022-23, FPIs witnessed a net outflow of Rs 37,632 crore due to aggressive rate hikes by global central banks.

The flows from foreign investors were influenced by various factors, including inflation and interest rate scenarios in developed markets, currency movements, crude oil prices, geopolitical dynamics, and the health of the domestic economy, according to Himanshu Srivastava, Associate Director - Manager Research at Morningstar Investment Research India.

Despite global economic turbulence, investors increasingly favored Indian equities, drawn by the market's resilience and robustness compared to similar markets.

After withdrawing funds in the previous fiscal year, FPIs made significant investments in the Indian debt market, highlighting a notable shift in their capital flow pattern.

Nitin Raheja, Executive Director at Julius Baer India, attributed FPIs' robust debt investments to attractive yields on Indian sovereign debt relative to US treasury bonds, supported by strong macroeconomic indicators such as GDP growth, stable inflation, and currency stability.

The anticipated inclusion of Indian government bonds in JP Morgan's benchmark emerging market index from June 2024 is expected to further bolster India's position, attracting substantial inflows into the Indian debt markets.

Despite intermittent fluctuations, FPIs ended the fiscal year on a positive note, demonstrating confidence in the Indian market's resilience and growth prospects.

Overall, FPIs exhibited a bullish stance during certain periods, contributing significantly to the Indian capital market's liquidity and stability. However, market dynamics and global events continue to influence their investment decisions, highlighting the importance of vigilance and adaptability in navigating volatile market conditions.

(With PTI inputs.)