Only A Question Of Time Before Foreign Money Comes Back, Says Citi India CEO; Cites IPO Resurgence

The current period of withdrawal by foreign portfolio investors from the Indian equity markets is only a temporary global-allocation trend, according to K Balasubramanian, chief executive officer of Citi India.

Despite foreign investors extending their selling streak to the longest in months, Balasubramanian is optimistic about a return of overseas capital, particularly given the strong international participation in the primary markets.

For the first time in the last five years, the total domestic institutional investor holdings in the Indian capital markets now surpass that of foreign investments.

This growing local strength is evident in data, where the DIIs have extended their buying streak to an impressive 33rd consecutive session, mopping up shares worth Rs 6,224.9 crore in a single day.

Conversely, the FPIs have continued their selling spree, pulling out nearly Rs 1.55 lakh crore from domestic equities so far this year.

Balasubramanian attributes the recent FII outflow to a mix of cyclical factors, including the election year, erratic rainfall and a temporary dip in government capital expenditure plans.

He noted that FII holdings have been decreasing in the top 500 companies in India over the last five months, primarily because of the strong influx of local money.

"These are trends we see in any global market allocations as investors are always looking for pockets and areas where they can make money," he said, suggesting the selling is a routine, rather than structural, shift.

Looking ahead, Balasubramanian emphasised the crucial role foreign capital plays in achieving India's long-term aspirations of becoming a developed nation. "Multinational banks like us have a very good role there as we have access to the foreign capital, which is the FDI."