Foreign investors injected ₹13,300 crore into Indian stocks in April
Foreign investors have injected over ₹13,300 crore into Indian stocks in the first half of April. This surge is attributed to a strong domestic economy and promising growth potential. Depository data shows that Foreign Portfolio Investors (FPIs) made a net investment of ₹13,347 crore in Indian stocks until April 12. However, changes to the India-Mauritius tax treaty could impact FPI inflows.
Geopolitical tensions and tax treaty modifications
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, warns that the revised India-Mauritius tax treaty could affect FPI inflows in the short term. Additionally, escalating geopolitical tensions in the Middle East, particularly between Iran and Israel, could influence market dynamics. Despite these uncertainties, domestic institutional investors (DIIs) and high net worth individuals (HNIs) remain optimistic about the Indian market due to its substantial liquidity.
Equities worth ₹8,027 crore offloaded
On April 12, FPIs sold equities worth ₹8,027 crore due to apprehensions surrounding changes in the India-Mauritius tax treaty. Factors contributing to this significant inflow include Fitch's downgrade of China's sovereign credit rating outlook, from stable to negative due to growth concerns. The prospect of a normal monsoon season easing inflationary pressures and a resilient domestic economy with promising growth prospects also played a part.
FPIs also invested in the debt market
In addition to stocks, FPIs have also invested ₹1,522 crore in the Indian debt market during this period. This trend has been consistent for several months due to the anticipated inclusion of Indian government bonds in the JP Morgan Index. The inclusion is expected to attract around $20-40 billion over the next one and a half to two years.
Total inflows reach impressive numbers in 2024
So far this year, total inflows amount to ₹24,241 crore in stocks and ₹57,380 crore in the debt market. Despite these impressive numbers, FPIs have slowed their buying momentum in Indian stocks since the start of the new fiscal year 2024-25. As of April 12, total inflows including debt, hybrid, debt-VRR, and stocks stood at ₹15,706 crore according to National Securities Depository Ltd (NSDL) data.
