The FPI Favourites & Unfavoured

One of the fastest growing economies and most stable currencies compared to others has strengthened India's macroeconomic outlook, thereby attracting foreign investors. Mandar Wagh explains which sectors and companies have drawn investors and which have not since it is critical to understand where the sectoral trajectories are heading, given the potential of FPIs to boost or deteriorate the economy

- Mandar Wagh

Despite some recent unease, the Indian equity markets have maintained their position as one of the top-performing global equity indices since April 2023. Frontline equity indices have experienced robust growth in the mid-teens, while broader equity indices have surged in the mid-twenties. This impressive performance can be attributed to several factors, including a favourable domestic macroeconomic environment and the anticipation of India experiencing one of the highest growth rates in the coming years. This positive outlook has also captured the attention of foreign investors, further bolstering the market’s upward trajectory.

Foreign portfolio investors (FPIs) are individuals or entities that make investments in the financial assets of other countries. FPIs include individual investors, institutional investors, central banks, and even governments. Stocks, bonds, mutual funds, exchange-traded funds, American depository receipts (ADRs) and global depository receipts (GDRs) are a few examples of financial instruments that are employed. FPIs can have a significant impact on the economies of the countries in which they invest since their unexpected buying or selling can create a major change in stock prices, which, depending on the situation, could result in either economic growth or instability.

Reasons for FPIs’ Enthusiasm about Indian Markets