Optimistic FPIS invest `2 lakh crore in FY24

Inflation, interest rate scenarios in US, UK key factors

New Delhi, March 29: Foreign investors made a strong return by injecting more than `2 lakh crore into Indian equities in 2023-24, driven by optimism surrounding the country’s robust economic fundamentals amidst a challenging global environment.

In the current fiscal 202324, foreign portfolio investors (FPIS) have made a net investment of around `2.08 lakh crore in the Indian equity markets and `1.2 lakh crore in the debt market. Collectively, they pumped `3.4 lakh cr into the capital market.

The flows from PFIS were largely driven by factors such as inflation and interest rate scenarios in developed markets US, UK, currency movement, the trajectory of crude oil prices, geopolitical scenario, and the health of the domestic economy among others, Himanshu Srivastava, associate director, Morningstar Investment Research India, said.

The dazzling resurgence came following an outflow from equities in preceding two financial years.

In 2022-23, Indian equities witnessed a net outflow of `37,632 cr by FPIS on aggressive rate hikes by the central banks globally. Before this, they pulled out a massive `1.4 lakh cr. However, in 20202021, FPIS made a record investment of `2.7 lakh cr.

Overall, FPIS started the year 2023-24 on a positive note in April and incessantly purchased equities till August on resilience of Indian economy amid an uncertain global macro backdrop. During these five months, they brought in `1.6 lakh crore. After this, FPIS turned net sellers in Sept. and the bearish stance continued in Oct. too with an outflow of over `39,000 cr.

However, FPIS became net investors in Nov. and the optimism persisted in Dec. too, when they purchased equity to the tune of `66,135 cr. Again, they turned sellers and pulled out `25,743 cr in Jan.

Looking forward to 2025, Bharat Dhawan, managing partner at Mazars in India, said that the outlook is cautiously optimistic and anticipates sustained FPI inflows supported by policy reforms, economic stability, and attractive investment avenues. “However, we remain mindful of global geopolitical influences that may introduce intermittent volatility,” he added.

OVERALL, FPIS started the year 2023-24 on a positive note in April and incessantly purchased equities till August on resilience of Indian economy amid an uncertain global macro backdrop.