This year has seen considerable foreign investment in India, particularly by Foreign Portfolio Investors (FPIs). As of now, their cumulative equity investment stands at an impressive ₹1.12 lakh crore, while their participation in the debt market surpasses ₹31,200 crore.
Diving deeper into sector-specific actions, FPIs have shown a marked inclination for selling in sectors such as financials, utilities, IT, and oil & gas. Conversely, they appear bullish on capital goods, automotive, and auto components, exhibiting strong buying patterns in these sectors. From March to August 2023, FPIs consistently poured funds into the Indian equity market, reflecting their confidence in its growth potential.
However, the scenario is not devoid of challenges. The robustness of the U.S. dollar and the high yields from U.S. bonds have prompted experts to speculate that FPIs might not be immediate buyers in the market for the foreseeable future. As per depository data, FPIs have sold shares worth ₹8,000 crore up to 6th October. India has remained an attractive destination for FPIs among emerging economies this year. But a selling trend became evident in September, and early October follows suit.
Several global factors are influencing this trend. Mounting economic uncertainties in the U.S. and Eurozone regions, coupled with concerns over global economic growth, have made foreign investors wary. In the current climate, they seem reluctant to embrace risks. Other factors such as soaring crude oil prices, persistent inflation figures, and the prospect of prolonged high-interest rates further endorse a ‘wait-and-watch’ strategy by foreign investors.
On a brighter note, FPIs have shown confidence in India’s debt and bond market. They have invested a commendable ₹2,081 crore in the first week of October alone. Such significant investment patterns in both equity and debt markets highlight the multifaceted approach of FPIs in India.
while the recent selling spree by FPIs in certain sectors might raise eyebrows, their continued investment in others underscores India’s position as a dynamic and diversified investment hub on the global stage.
