FPIs turn cautious, infuse Rs 3,900 cr in Indian equities during Jan 1-12

Foreign Portfolio Investors (FPIs) have adopted a cautious stance and put around Rs 3,900 crore in Indian equities in the first two weeks of this month, against the backdrop of uncertainty over the interest rate scenario.

The investment has slowed down compared to Rs 66,134 crore attracted in the entire December.

Before that, FPIs invested Rs 9,000 crore in November.

According to data with the depositories, foreign investors made a net investment of Rs 3,864 crore in Indian equities this month (till January 12).

The latest investment pattern could be largely attributed to investors booking profit with Indian equity market trading near its all-time high level, said Himanshu Srivastava, Associate Director - Manager Research, Morningstar Investment Adviser India.

Moreover, uncertainty over the interest rate scenario could have also prompted them to stay on the sidelines and wait for further cues, before taking investment decision with respect to investing in emerging markets like India, he said.

Continuing geopolitical conflicts are also a persistent risk, which foreign investors are cognisant of while making investment decisions, he added.

Meanwhile, FPIs continue to be bullish on the debt market and injected Rs 7,912 crore during the period under review, the data showed.

This came following a net investment of Rs 18,302 crore in December, Rs 14,860 crore in November, and Rs 6,381 crore in October, data showed.

The announcement by JP Morgan Chase & Co. in September that it will add Indian government bonds to its benchmark emerging market index from June next year has influenced the inflow in the country's bond markets in the past few months.

Overall, the total FPI flows in 2023 stood at Rs 1.71 trillion in equities and Rs 68,663 crore in the debt markets. Together, they infused Rs 2.4 trillion into the capital market.

The flow in Indian equities came following a worst net outflow of Rs 1.21 trillion in 2022 on aggressive rate hikes by the central banks globally. Before the outflow, FPIs invested money in the last three years.