Foreign portfolio investors (FPIs) have significantly increased their investments in the Indian market, infusing ₹11,730 crore into equities. This renewed interest contrasts sharply with the previous week’s net outflow of ₹14,794 crore, resulting in a net outflow of ₹3,064 crore for the month up to June 14.
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, attributes this positive shift to market stability and favorable indicators. He noted the sharp decline in India VIX, from 27 on June 4 to 12.82 on June 14, reflecting a more stable market. The formation of the NDA government for a third term has also boosted expectations for continued policy reforms and economic growth.
Globally, lower-than-expected inflation figures in the US have raised hopes for an interest rate cut this year, encouraging risk-taking among investors and driving inflows into Indian markets. This is a stark contrast to the FPIs’ actions in May, when they withdrew ₹25,586 crore due to election uncertainties, and in April, when they pulled out over ₹8,700 crore due to concerns about changes in India’s tax treaty with Mauritius and rising US bond yields.
In addition to equities, FPIs have also shown interest in the Indian debt market, investing over ₹5,700 crore so far this month. Experts are optimistic about the long-term outlook for FPI flows into Indian debt, largely due to India’s inclusion in global bond indices. However, near-term flows are being influenced by global macroeconomic uncertainty and volatility.
Source:NewsBytes