Summarize

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Foreign Portfolio Investors (FPIs) are pouring money into Indian equity and debt markets, thanks to improved global economic conditions and a favorable Indian macroeconomic environment.
The recent market downturn has created attractive buying opportunities, while strong GDP growth and potential rate cuts by the Reserve Bank of India are also drawing FPIs.
Additionally, India's inclusion in Bloomberg's Emerging Market Local Currency Government Index has led to a surge in FPI inflows into debt.
Experts predict that these factors could position India as a leader in global emerging markets in the coming years.

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Investors have shown strong resurgence due to global economic shifts

FPIs display remarkable recovery in Indian equity markets this March

By Akash Pandey

Mar 24, 2024

02:46 pm

What's the story

Foreign Portfolio Investors (FPIs) have ramped up their investment activities in the Indian equity markets in March 2024, pouring in over Rs. 38,000 crore. This comes after a relatively small investment of Rs. 1,539 crore in February, and a substantial withdrawal of Rs. 25,743 crore in January. As a result, the net investment by FPIs for the year has swung into positive territory, with Rs. 13,893 crore invested in equities and Rs. 55,480 crore in the debt market.

Scenario

Global economic uplift fuels investment

FPIs have become significant buyers in March. The revival is credited to better global economic conditions and a favorable Indian macroeconomic environment. The recent market downturn has also presented an attractive buying opportunity for FPIs. Moreover, experts believe that the increase in FPIs can be linked to strong GDP growth and anticipations surrounding a prospective adjustment in the Reserve Bank of India's policy, potentially resulting in rate reductions ranging from 25 to 50 basis points in latter part of FY2025.

What's more?

FPIs pump massive capital into Indian debt market

FPIs have been investing in the Indian debt markets for the past few months. In March, they have channeled a hefty Rs. 13,223 crore. This surge came on the heels of Bloomberg's announcement about including India's bonds in its Emerging Market (EM) Local Currency Government Index from January 31, 2025. The consistent FPI inflows into debt is also linked to this inclusion of Indian bonds in the JP Morgan EM Bond Fund.

Facts

India's promising stand in global emerging markets

Market experts anticipate that upcoming general elections, large corporations reporting significant earnings, and attractive valuations could propel India to a leading position among global emerging markets for at least the next two to three years. Nitin Raheja, Executive Director at Julius Baer India, added, "FPI debt investments have been extremely robust this fiscal due to attractive yields on Indian sovereign debt relative to the US treasury." This implies a positive future for FPI investment in India.