Foreign portfolio investors have invested Rs 41,483 crore in Indian equities in March so far after reversing their selling streak to become buyers in 2024.
The reported FPI figures incorporate certain bulk transactions conducted through stock exchanges, which may not accurately reflect the entirety of FPI activity, according to analysts.
Foreign investors have net bought Indian equities worth Rs 17,278 crore so far this year until March 19. The primary markets saw an inflow of Rs 14,456.67 crore so far, according to data from the National Securities Depository Ltd. Overseas institutional investors had mopped $186 million or Rs 1,539 crore worth of stocks in February.
An important feature of the FPI investment for many months now has been its erratic nature. The FPIs have been changing their strategy in response to the changes in the bond yields in the US, according to VK Vijayakumar, chief investment strategist at Geojit Financial Services Ltd. "Therefore, now that US bond yields have again spiked up in response to stubborn inflation, (the) FPIs may again turn sellers in some of the days."
An important trend in the market in March is the weakness in the mid and small caps and the resilience in large caps. This also has persuaded the FPIs to reduce selling in large caps and even buying in limited quantities in sectors like banking, telecom and automobiles, according to Vijayakumar.
Foreign funds did not quit India when China began its recent rally over the last few weeks, suggesting that investors are treating China and India separately, according to Herald van der Linde, head of Asia Equity Strategy at HSBC.
In an interview to NDTV Profit, Linde remains positive about India, expecting a gradual increase rather than a sharp rally.
The FPIs have also been pumping money into the debt market. This momentum is mainly fuelled by the domestic gilt inclusion in the JPMorgan Bond Index, Bloomberg emerging market indices and the government's aggressive fiscal deficit target for the 2024–25.
Foreign inflows into Indian debt stood at Rs 53,595 crore so far this year, with Rs 19,837 crore in January and Rs 22,419 crore in February, according to the data from the NSDL. March recorded an inflow of Rs 11,339 crore so far.
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