At Rs. 1.75L crore, Indian equities see highest-ever foreign inflows
In 2023, foreign portfolio investors (FPIs) have invested a record-breaking Rs. 1,74,663 crore into the Indian stock market, surpassing the previous high of Rs. 1,72,849 crore in 2020. This influx of funds into Indian equities reflects the confidence of foreign investors in the narrative of India's economic growth. The optimism about India's economic future, the US Federal Reserve's signal to cut rates in 2024, and expectations of the BJP winning next year's general elections contributed to this surge.
FPIs shifted focus from China to India and South Korea
In 2023, India attracted a significant portion of foreign investment, as China faced economic slowdown concerns, a shaky real estate sector, mounting internal debt issues, and underperforming stock markets. Stock inflows in India reached record levels in 2023 with a late surge, as FPIs invested Rs. 66,135 crore in December, marking the highest monthly flows. According to brokers, a segment of funds directed toward emerging markets found its way into the stock markets of India and South Korea.
Rich valuations may deter large allocations in 2024
According to the market observers, overseas investors might show reduced interest in injecting comparable sums into Dalal Street in 2024, attributing this hesitancy to elevated share valuations. Nevertheless, the influx of passive investments into India may persist through 2024 unless there's a resurgence of growth in China or the US Federal Reserve is compelled to temper its dovish stance due to inflationary worries. The primary apprehension of foreign fund managers regarding India revolves around premium stock valuations.
