Driven by optimism regarding the country’s solid economic fundamentals in the face of a challenging global climate, foreign investors made a strong return on their more than Rs 2 lakh crore investment in Indian shares in 2023–2024.
Foreign Portfolio Investors (FPIs) have made net investments in the Indian equities markets amounting to around Rs 2.08 lakh crore and in the debt market to Rs 1.2 lakh crore during the current fiscal year, 2023-24. Data from the depositories indicates that they invested a total of Rs 3.4 lakh crore in the stock market.
The spectacular comeback was preceded by a withdrawal from stocks during the previous two fiscal years. FPIs withdrew a net amount of Rs 37,632 crore from Indian equity in 2022–2023 due to the aggressive rate hikes implemented by central banks worldwide. They took out an incredible Rs 1.4 lakh crore before this. Nonetheless, FPIs invested a record Rs 2.74 lakh crore in 2020–2021.
FPIs made a significant change in their capital flow when they poured a whooping Rs 1.2 lakh crore into the debt market after taking money out in the previous fiscal year. In FY23, they withdrew a total of Rs 8,938 crore.
Overall, FPIs had a good start to 2023–24 thanks to their continued purchases of stocks through August, even in the face of uncertainty surrounding the global macro environment. This was due to the Indian economy’s resiliency. They generated revenue of Rs 1.62 lakh crore in these five months. With an outflow of approximately Rs 39,000 crore in these two months, FPIs thereafter became net sellers in September and maintained their pessimistic outlook in October.
This may be a result of China becoming more open following the lockdown. FPIs redirected their investments toward China as a result, taking money out of other rising markets like India. China, meanwhile, had trouble maintaining investor interest. FPI purchases of shares totaling more than Rs 35,000 crore in March also contributed to the fiscal year’s successful conclusion.
