FPIs Maintain Momentum In Equities, Invest Rs 6,139 Crore In March So Far

The influx followed an investment of Rs 1,539 crore in February after clocking a major outflow of Rs 25,743 crore in January, official data with the depositories showed

Foreign Portfolio Investors (FPIs) continued to maintain a bullish stance towards the Indian equities market and poured in Rs 6,139 crore in March so far, helped by strong economic growth, resilience shown by the market, and a fall in the US bond yields. The influx followed an investment of Rs 1,539 crore in February after clocking a major outflow of Rs 25,743 crore in January, official data with the depositories showed.

At the same time, the investors continued to inject into the debt market and the investment stood at Rs 1,025 crore in the period under review, data revealed. The investors infused the debt market with Rs 22,419 crore in February, Rs 19,836 crore in January, and Rs 18,302 crore in December. 

Commenting on the flows in the equities segment, Manoj Purohit, Partner and leader - FS Tax, Tax and Regulatory Services, BDO India, said, “FPI inflows have shown a positive trend as compared to the previous month. Thanks to the recent announcement of Q3 GDP numbers at 8.4 per cent, persistence performance of large Indian corporates being major factors for turning the tide green for the Indian equity market.”

He noted that other factors that helped contribute in attracting investment included certain regulatory policies. “Announcements such as removal of UAE from the grey list, Sebi's consultation paper for easing disclosures norms for regulated FPIs have been the major catalysts to put India on the forefront for potential long term investments for the foreign fraternity,” he said.

Elaborating on the reasoning behind the renewed interest in equities, V K Vijayakumar, chief investment strategist, Geojit Financial Services, cited the resilience of Indian markets, a consistent fall in the US bond yields, and robust GDP growth as the three main factors.

“These positive developments and the sustained flow of funds into the market -- both directly and through institutions -- can keep the market resilient. However, high valuations are a matter of concern. Valuations in the mid and small cap segments are excessive and unjustifiable. Correction in this segment is only a matter of time,” Vijayakumar added.

The inflow in the debt market came in the backdrop of the recent announcement from Bloomberg to include India’s bonds in its Emerging Market (EM) Local Currency Government Index and related indices. The inclusion will be effective from January 31, 2025. The overall outflow of the year so far touched Rs 18,000 crore in equities and an inflow of Rs 43,280 crore in the debt market.