Independence Day 2024 | FPIs pumped ₹64,824 crore in Indian equities over 12 months: 5 key reasons behind inflows

Foreign portfolio investors (FPIs) snapped their two-month buying streak in Indian equities and turned net sellers in August. FPIs were consistent buyers for June and July as stability had returned to Indian markets. However, FPIs had halted their buying streak with the onset of the new fiscal 2024-25 (FY25).

FPIs sold ₹18,824 crore worth of Indian equities, and the net sell-off stood at ₹8,207 as of August 14, taking into account debt, hybrid, debt-VRR, and equities, according to the National Securities Depository Ltd (NSDL) data. The total investment in debt markets stood at ₹8,624 crore so far in August.

FPIs inflows in last 12 months

In July, FPIs invested ₹32,365 crore in Indian equities, and the total investment in debt markets stood at ₹22,363 crore on the back of strong market resilience, which attracted greater inflows.

FPIs snapped their two-month selling streak and turned net buyers in June, infusing ₹26,565 crore in Indian equities and ₹14,955 crore in the debt market. The selling reversed after stability returned to the market as election jitters faded.

In May 2024, FPIs offloaded ₹25,586 crore worth of Indian equities, and the debt inflows stood at ₹8,761 crore. Uncertainty over the outcome of the Lok Sabha elections 2024, high US bond yields, high Indian market valuations, and the outperformance of Chinese stocks weighed on sentiments.

FPIs offloaded ₹8,671 crore in Indian equities in April and ₹10,949 crore in debt markets over high US bond yields. However, they pumped ₹35,098 crore in Indian equities during March 2024 – the highest inflows recorded in the first three months of 2024. FPI outflow declined in February 2024 until they were net buyers by the end of the month despite high US bond yields.

The inflow into Indian equities stood at ₹1,539 crore in February 2024 and the debt market investment rose to ₹22,419 crore during the month on top of the ₹19,836 crore bought in January. The inclusion of government bonds to JPMorgan and Bloomberg debt indices had triggered foreign fund inflows into debt markets.

FPIs turned massive sellers in January 2024, snapping their buying streak. Investments saw a sharp uptick in December 2023 after they reversed their three-month selling streak in November 2023. However, inflow intensified in December 2023 after the US Federal Reserve signalled the end of its tightening cycle and raised expectations of rate cuts. This led to a crash in US bond yields and triggered foreign fund inflows into emerging markets like India.

According to NSDL data, FPIs bought ₹1.71 lakh crore in Indian equities for the entire calendar year 2023, and the total inflow, taking into account debt, hybrid, debt-VRR, and equities, stands at ₹2.37 lakh crore. FPIs’ net investment in the Indian debt market stood at ₹68,663 crore during 2023.

Disclaimer: The views and recommendations provided in this analysis are those of individual analysts or broking companies, not Mint. We strongly advise investors to consult with certified experts before making any investment decisions, as market conditions can change rapidly and individual circumstances may vary.