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July 19, 2024
Foreign Portfolio Investors returns to Indian Markets
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Foreign Portfolio Investors returns to Indian Markets

Jun 18, 2024

In a pivotal turnaround for India’s financial markets, Foreign Portfolio Investors (FPIs) have made a resounding return, injecting over USD 1.45 billion in net investments over the past five trading sessions. The influx reached a crescendo on June 14, as FPIs poured USD 644.61 million into the market, surpassing the significant milestone of USD 1 billion in cumulative investments.

This resurgence comes in the wake of heightened volatility during the recent elections, marked by substantial sell-offs as election uncertainties unfolded. The absence of a clear majority initially rattled investor confidence, resulting in one of the market’s most severe downturns in recent memory.

However, the formation of a stable government under the National Democratic Alliance (NDA) swiftly reversed sentiment, restoring faith among global investors. The subsequent surge in FPI activity underscores renewed optimism in India’s political stability and economic resilience.

According to data from the National Securities Depository Limited (NSDL), FPIs exhibited a strong buying streak starting from June 10, with net investments of USD 805.82 million, followed by USD 317.82 million on June 11. A brief deviation occurred on June 12, marked by a USD 285.32 million sell-off, only to be swiftly countered with USD 326.46 million in investments on June 13. These movements culminated in the impressive USD 1.45 billion net investment figure.

Throughout May, FPIs had been notably disinvesting, with equity sales amounting to Rs 25,586 crore, reflecting a period of sustained market volatility. Year-to-date, FPI divestments in 2024 have totaled Rs 26,428 crore, indicating a strategic shift towards selling through exchanges while concurrently reinforcing positions via primary market channels.

Market stabilization post-election upheaval has been evident, bolstered by anticipations around upcoming budget announcements, poised to provide further clarity on the new government’s policy direction. Analysts foresee continued adjustments in market dynamics as fiscal policies unfold, solidifying India’s position as a key investment destination amidst global economic recalibrations.

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