FPIs turn cautious, infuse Rs 3,900 cr in Indian equities

In the initial weeks of January, Foreign Portfolio Investors L(FPIs) have adopted a cautious stance, directing approximately Rs 3,900 crore into Indian equities. This is a significant slowdown compared to the substantial Rs 66,134 crore attracted in the entire month of December.

Preceding this, FPIs had invested Rs 9,000 crore in November. According to data from depositories, foreign investors made a net investment of Rs 3,864 crore in Indian equities by January 12.

The current investment pattern can be attributed, in large part, to investors opting to book profits, given that the Indian equity market is trading near its alltime high. Himanshu Srivastava, Associate Director - Manager Research at Morningstar Investment Adviser India, suggests that uncertainty surrounding the interest rate scenario may have also played a role, leading investors to remain on the sidelines and await further cues before making investment decisions, particularly concerning emerging markets like India. Additionally, persistent geopolitical conflicts remain a significant risk that foreign investors consider when making investment decisions.

Simultaneously, FPIs continue to exhibit a bullish outlook on the debt market, injecting Rs 7,912 crore during the reviewed period. This follows a notable net investment of Rs 18,302 crore in December, Rs 14,860 crore in November, and Rs 6,381 crore in October. The announcement by JP Morgan Chase & Co. in September that it would add Indian government bonds to its benchmark emerging market index from June the following year has notably influenced the inflow into the country’s bond markets over the past few months.