With a net inflow of Rs 11,730 crore ($ 1.4 billion) in the week ended July 14, foreign investors made a comeback of sorts after being net sellers for a while. In fact FPIs have been net sellers in May and saw maximum outflows since January 2024.
Data from the depositories indicated that the net inflow was a sharp contrast to the net outflow of Rs 14,794 crore ($ 1.77 billion) that occurred during the previous week, from June 3–7. As of June 14, the net outflow for the month recorded was Rs 3,064 crore based on the most recent flow.
In May, FPIs pulled out Rs 25,586 crore from equities on poll jitters and withdrew more than Rs 8,700 crore in April on concerns over a tweak in India’s tax treaty with Mauritius and a sustained rise in US bond yields. Before that, FPIs made a net investment of Rs 35,098 crore in March and Rs 1,539 crore in February, while they took out Rs 25,743 crore in January.
Himanshu Srivastava, Associate Director – Manager Research, Morningstar Investment Research India, said, “Although in a coalition, the formation of the NDA government at the Centre for the third straight term fanned expectation of a continuation of policy reforms and economic growth. On the global front, lower-than-expected inflation numbers in the US also raised hopes of one rate cut this year. This also triggered a fall in the US treasury yield. These factors led to risk-taking sentiments among investors, resulting in increased flows into markets like India.”
On the other hand, FPIs invested over Rs 5,700 crore in the debt market so far this month, till June 14.
Market experts believe that the long-term outlook for FPI flows into Indian debt is positive due to India’s inclusion in global bond indices. However, near-term flows are being impacted by global macroeconomic uncertainty and volatility. Overall, FPIs withdrew a net amount of Rs 26,428 crore from equities in 2024 so far. However, they invested Rs 59,373 crore in the debt market.
(with inputs from PTI)