FPI Inflow In Indian Debt Market Crosses Rs 15,000 Crore In Feb So Far

At the same time, investors withdrew more than Rs 3,000 crore from Indian equities during the month so far. Before this, the data revealed that investors took out Rs 25,743 crore in January 2024

Foreign Portfolio Investors (FPIs) maintained their bullish perspective on the debt markets in India and poured in over Rs 15,000 crore in February so far after JP Morgan included the Indian government bonds in their index, official data from the depositories showed. The inflow in the debt markets stood at Rs 15,093 crore in the month, till February 9, 2024. 

The investors infused Rs 19,836 crore in January, which marked the highest monthly inflow seen in over six years, reported PTI. Notably, earlier in June 2017, the investors poured in Rs 25,685 crore. At the same time, investors withdrew more than Rs 3,000 crore from Indian equities during the month so far. Before this, the data revealed that investors took out Rs 25,743 crore in January 2024. 

Elaborating on the investment trends, V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, noted, “The main trigger for this divergent trend in equity and debt is the high valuation in the Indian equity market and the rising bond yields in the US.”

Himanshu Srivastava, Associate Director - Manager Research, Morningstar Investment Research India, explained the outflow from equities was due to the uncertainty about interest rates, both globally and in the domestic market.

Notably, the overall investments by FPIs in the year has now crossed Rs 34,930 crore. “They have been injecting money in the debt markets for the past few months. FPIs infused Rs 18,302 crore in the debt market in December, Rs 14,860 crore in November and Rs 6,381 crore in October. The Indian debt markets witnessed a reversal in FPI flow trend last year after the announcement of the inclusion of Indian government bonds in the JP Morgan Index. This was one of the major drivers for the robust flows from FPIs, along with relatively stable economy,” Srivastava stated.

The inclusion of Indian government bonds to JP Morgan’s benchmark emerging market index is expected to help the Indian economy by about $20-40 billion in the coming 18 to 24 months, the analyst added. “This inflow is expected to make Indian bonds more accessible to foreign investors and potentially strengthen the rupee, thereby bolstering the economy,” he noted. The overall FPI flows in 2023 touched Rs 1.71 lakh crore in equities and Rs 68,663 crore in debt markets.