FPIs Infuse Over Rs 38,000 Cr in Equities in March Amid Strong Domestic Economic Outlook

Foreign Portfolio Investors (FPIs) have shown a significant resurgence in their investment activity within the Indian equity markets this month, injecting over Rs 38,000 crore. This surge is mainly driven by favorable shifts in the global economic scenario and a strong domestic macroeconomic outlook.

In February, FPIs made a modest investment of Rs 1,539 crore, following a massive outflow of Rs 25,743 crore in January, according to data from the depositories. However, their investment has turned positive to the tune of Rs 13,893 crore in equities so far in 2024 and Rs 55,480 crore in the debt market.

Himanshu Srivastava, Associate Director at Manager Research at Morningstar Investment Research India, highlighted that FPIs have become significant buyers in March. The improved global economic conditions and positive Indian macroeconomic scenario have driven FPIs to invest in high growth-oriented markets like India. Additionally, the recent market correction has provided a buying opportunity.

Experts believe that the influx of FPIs can be attributed to robust GDP growth and expectations of a potential shift in the RBI’s policy, possibly leading to rate cuts of 25-50 basis points in the latter half of fiscal 2025.

Last week, FPIs turned net sellers, although marginally, to the tune of USD 314 million. This cautious approach could be attributed to various factors affecting the global economic landscape.

Aside from equities, FPIs have also injected a massive Rs 13,223 crore into the debt market this month (till March 22). This came in the backdrop of Bloomberg announcing India’s bonds inclusion in its Emerging Market (EM) Local Currency Government Index and related indices from January 31 next year.