FPIs invest ₹11,366 crore in Indian debt market this August
Foreign portfolio investors (FPIs) have invested a substantial amount of ₹11,366 crore into the Indian debt market in August 2024. This significant inflow follows a net investment of ₹22,363 crore in July, ₹14,955 crore in June and ₹8,760 crore in May. The latest data reveals that the total net investment by FPIs for this year, has now surpassed the ₹1 lakh crore mark.
Inclusion in JP Morgan's index boosts FPI interest
The surge in FPI interest toward the Indian debt market is largely attributed to India's inclusion in JP Morgan's Emerging Market government bond indices, announced in June this year. Since the announcement was made public last October, FPIs have been proactively investing in Indian debt markets. Despite the official inclusion, their inflows have remained strong and consistent.
FPIs withdraw over ₹16,305 crore from equities in August
In contrast to the robust inflow into the debt market, FPIs have withdrawn over ₹16,305 crore from equities this month. This is due to factors such as unwinding of the yen carry trade, fears of a US recession, and ongoing geopolitical conflicts. Himanshu Srivastava from Morningstar Investment Research India, attributes this selling spree mostly to the announcement of a hike in capital gains tax on equity investments.
India remains favorable for long-term investments
Manoj Purohit from BDO India, highlights, "Amidst a global slowdown, geo-political crisis in the middle east and neighboring countries, India still stands at a sweet spot compelling the foreign fraternity to take a bet for long term investment horizon." This statement underscores the resilience of the Indian market in attracting foreign investments despite global economic uncertainties.
FPIs show sector-specific investment trends
In the first half of August, FPIs were major sellers in India's financial sector. Vipul Bhowar from Waterfield Advisors attributes this to concerns over slow deposit growth and challenges for banks with diminishing margins, deteriorating asset quality, and rising provisions. However, foreign investors showed interest in telecom and healthcare categories where growth and earnings prospects are considered safe and promising.
