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| Photo Credit: Reuters
Foreign Portfolio Investors (FPIs) continued their bullish stance on the nation’s debt markets with a web infusion of over ₹15,000 crore thus far this month, on the again of inclusion of Indian authorities bonds in the JP Morgan Index together with comparatively steady economic system.
This adopted a web funding of ₹19,836 crore in January, making it the very best month-to-month influx in greater than six years. This was the very best influx since June 2017, after they infused ₹25,685 crore.
On the opposite hand, overseas traders pulled out greater than ₹3,000 crore from equities throughout the interval beneath evaluation. Before this, they withdrew an enormous ₹25,743 crore in January, information 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 Okay 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 atmosphere, each domestically in addition to globally.
According to the information, FPIs made a web funding of ₹15,093 crore in the debt markets in this month (until February 9).
With this, the overall funding by FPIs reached over ₹34,930 crore in 2024.
They have been injecting cash in the debt markets for the previous few months.
FPIs infused ₹18,302 crore in 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 yr introduced that it’s going to 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 in the following 18 to 24 months.
This influx is predicted to make Indian bonds extra accessible to overseas traders and probably strengthen the rupee, thereby bolstering the economic system, he added.
Overall, the overall FPI flows in 2023 stood at ₹1.71 lakh crore in equities and ₹68,663 crore in 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 in the final three years.
