Foreign Portfolio Investors (FPIs) continued their bullish stance on the nation’s debt markets with a web infusion of over ₹15,000 crore to this point this month, on the again of inclusion of Indian authorities bonds within the JP Morgan Index together with comparatively steady economic system.
This adopted a web funding of ₹19,836 crore in January, making it the best month-to-month influx in additional than six years. This was the best influx since June 2017, once they infused ₹25,685 crore.
On the opposite hand, international buyers pulled out greater than ₹3,000 crore from equities throughout the interval below overview. Before this, they withdrew an enormous ₹25,743 crore in January, knowledge with the depositories confirmed.
“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,” V Ok Vijayakumar, Chief Investment Strategist, Geojit Financial Services, mentioned.
Himanshu Srivastava, Associate Director – Manager Research, Morningstar Investment Research India, attributed the outflow from equities to the uncertainty surrounding the rate of interest surroundings, each domestically in addition to globally.
According to the info, FPIs made a web funding of ₹15,093 crore within the debt markets on this month (until February 9).
With this, the entire funding by FPIs reached over ₹34,930 crore in 2024.
They have been injecting cash within the debt markets for the previous few months.
FPIs infused ₹18,302 crore within the debt market in December, ₹14,860 crore in November, and ₹6,381 crore in October.
“The Indian debt markets witnessed a reversal in FPI flow trend last year after the announcement of 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 mentioned.
JP Morgan Chase & Co. in September final 12 months introduced that it’ll add Indian authorities bonds to its benchmark rising market index from June 2024.
This landmark inclusion is anticipated to profit India by attracting round $20-40 billion within the subsequent 18 to 24 months.
This influx is predicted to make Indian bonds extra accessible to international buyers and probably strengthen the rupee, thereby bolstering the economic system, he added.
Overall, the entire FPI flows in 2023 stood at ₹1.71 lakh crore in equities and ₹68,663 crore within the debt markets.
Together, they infused ₹2.4 lakh crore into the capital market.
The move in Indian equities got here following a worst web outflow of ₹1.21 lakh crore in 2022 on aggressive charge hikes by the central banks globally. Before the outflow, FPIs invested cash within the final three years.