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Photo:FILE FPI investment in May General election Foreign portfolio investors (FPIs) have made a massive withdrawal of Rs 25,586 crore from Indian stocks in May due to uncertainty over the results of the BSE and the better performance of Chinese markets. This is much higher than the net withdrawal figure of over Rs 8,700 crore in April due to concerns over changes in India’s tax treaty with Mauritius and the continued rise in US bond yields. According to depository data, earlier FPIs had made a net investment of Rs 35,098 crore in shares in March and Rs 1,539 crore in February. <!-- /8323530/Khabar_Desktop_VDO_1X1 --> The direction of FPI inflow will be decided by the results The results of the general elections are to be announced on June 4. This will determine the direction of FPI flow in the Indian market in the near future. Vijaykumar, Chief Investment Strategist, Geojit Financial Services, said that US interest rates will have a greater impact on FPI flow in the medium term. According to the data, foreign portfolio investors have withdrawn a net Rs 25,586 crore from stocks in May. Vipul Bhowar, Director-Listed Investments, Waterfield Advisors, said, “FPIs are withdrawing from Indian stocks due to political uncertainty along with relatively high valuations and weak quarterly results of financial and IT companies in particular. Apart from this, FPIs are also withdrawing money from Indian stocks due to the attraction of FPIs towards Chinese markets. China’s market is performing well Vijaykumar said, “The main reason for FPI selling has been the better performance of Chinese stocks. The Hang Seng index has climbed eight percent in the first fortnight of May.” He said that another reason for FPI selling is the increase in bond yield in America. Whenever the yield on 10-year bonds in America goes above 4.5 percent, FPIs sell in emerging markets like India and invest their investments in bonds. He said that in case of strong GDP growth figures, inflation being within manageable limits and political stability, FPIs can buy further. India’s growth rate was 8.2% in the financial year 2024 According to data released on Friday, the Indian economy grew at a rate of 7.8 percent in the fourth quarter of the last financial year, which is much higher than the estimate of 6.7 percent. India’s GDP growth rate has been 8.2 percent in the entire financial year 2023-24. Apart from this, the record dividend of Rs 2.1 lakh crore from the Reserve Bank of India has provided financial scope to the government to push forward infrastructure spending. FPIs have invested Rs 8,761 crore in the debt or bond market during the period under review. Earlier, foreign investors had invested Rs 13,602 crore in the bond market in March, Rs 22,419 crore in February and Rs 19,836 crore in January. Overall, FPIs have withdrawn Rs 23,364 crore from shares so far in 2024. During this period, they have invested Rs 53,669 crore in the bond

The GREAT BOND SELL-OFF !!! 👉 Foreign investors traditionally buy Indian bonds to earn steady income through interest payments. However, recently, there has been a significant sell-off, with ₹4,960 Cr. ($588 million) worth of Indian bonds being sold through FAR(Fully Accessible Route) in just one week, the largest weekly outflow since Indian bonds were included in JPMorgan’s major emerging-market bond index in June. FAR (Fully Accessible Route) Bonds??? 👉 The Fully Accessible Route (FAR) is a special category of Indian government bonds that allows unlimited foreign investor participation, introduced in 2020 to attract global capital & enhance India’s presence in international bond indices. Why Are Foreign Investors Selling? 👉 The primary reason for sell-off is rise in U.S. government bond yields. U.S. Treasury bonds are considered one of the safest investments in the world. When their yields rise, investors often shift their money into U.S. bonds for security. 👉 After Trump came to power, expectations of higher government spending & inflation squashed hopes for any further rate cuts, which led to an increase in U.S. bond yields making them more attractive compared to Indian bonds. 👉 The difference in yields between India’s 10-year bonds & U.S. Treasury bonds has narrowed to just 2.43%, one of the lowest in recent years. (see Image below). This means Indian bonds are no longer offering returns that are high enough to make them appealing when compared to U.S. bonds. Well, the RBI is playing its part too. 👉 With inflation surging, the RBI has taken a hawkish stance, resisting the urge to cut interest rates. Why? Lowering rates could fuel inflation further, which already hit a 14-month high in October. For bond investors, this is a double blow: 1.)Bond prices are unlikely to rise significantly due to stable or high interest rates; 2.)Higher inflation reduces the real value of returns from bonds, making them less appealing. Not to forget, foreign investors have already sold $2.7 billion worth of Indian stocks in November. It’s not all bad news, though. India’s inclusion in global bond indices like JPMorgan’s & upcoming additions by Bloomberg & FTSE Russell signal long-term confidence in the country’s financial system. Mitesh Shah Ajay Sampath Aravinda Subramanyam Chanchal Agarwal Krishnaprasad Ramanathan Neha Joshi, CA Nitesh Arora ✍: Hetvi Modi Bhurat #BondMarket #ForeignInvestors #IndianBonds #FinancialMarkets #FARBonds #EmergingMarkets #InterestRates #USBonds #Inflation #RBI #BondYields (Image Source: Bloomberg)

Foreign investors made a strong return by injecting more than Rs 2 lakh crore into Indian equities in 2023-24, driven by optimism surrounding the country's robust economic fundamentals amidst a challenging global environment. Looking forward to 2025, Bharat Dhawan, Managing Partner at Mazars in India, said that the outlook is cautiously optimistic and anticipates sustained FPI inflows supported by progressive policy reforms, economic stability, and attractive investment avenues. #fpi #foreigninvestor #indianequities

Foreign investors infuse 11000 crore in domestic equities in week of September. The foreign investors invested close to Rs 11,000 crore in domestic entities during the first week of the month due to the resilience of the Indian market and the anticipation of a rate cut in the US. Since June, foreign portfolio investors (FPIs) have been steadily buying equities. They had already taken out funds totaling Rs 34,252 crore in April and May. Himanshu Srivastava, Associate Director- Manager Research, Morningstar Investment Research India, said that the recent inflows show promise and may continue due to India’s stable macroeconomic position. Global factors such as the US interest rate and the geopolitical environment, would still be important. “The substantial net inflows this week can be attributed to enhanced speculation of the commencement of interest rate cut cycle soon, coupled with improved prospects for India’s economic growth,” Srivastava said. Based on information provided by the depositories, foreign portfolio investors invested a total of Rs 10,978 crore into equities this month up until September 6. FPIs have been on a buying spree in the Indian equities markets since US Federal Reserve Chair Jerome Powell’s remarks, which hinted at the possibility of a rate cut. Srivastava added that purchasing a small number of few selected large-cap stocks also contributed to the inflows, indicating the desire of foreign investors to take advantage of the opportunities offered by the Indian equities markets. According to V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, the consequent fall in the US 10-year bond yield to 3.73 per cent is positive for FPI inflows into emerging markets like India. However, the elevated valuations are a concern. If the US growth concerns impact global equity markets in the coming days, FPIs are likely to use the opportunity to buy in India, he added. Investors should be cautious about FPI allocations due to China's economic struggles and potential US recession. Emerging markets may see reduced FPI inflows if risk-off sentiment continues. Rishabh Kale

Rs 94,000 Crore Withdrawn By Foreign Investors In October Foreign investors withdrew Rs 94,000 crore (approximately USD 11.2 billion) from Indian stock markets in October, the highest monthly outflow ever recorded, surpassing the previous withdrawal of Rs 61,973 crore in March 2020 during the covid pandemic.This comes in stark contrast to September 2024, when foreign portfolio investors (FPIs) made a notable net investment of Rs 57,724 crore, marking a nine-month high.This sharp exit was prompted by high domestic equity valuations and the appeal of attractive valuations in the Chinese stock market. Findings Several factors, Key reasons include high valuations in the Indian stock market, which prompted investors to shift to markets with more attractive valuations, such as China. Additionally, rising U.S. Treasury yields have made investments in U.S. bonds more appealing. Concerns over global economic uncertainty and inflationary pressures have also impacted investor confidence, contributing to this unprecedented outflow. future foreign investment in Indian equities will be influenced by global factors, including geopolitical events, interest rate changes, Chinese economic performance and US Presidential election results.Domestic factors such as inflation patterns, corporate performance and festive season demand impact will remain under FPI observation as they evaluate Indian market opportunities. Impact on Market Indices The aggressive selling by FPIs has led to an approximately 8% decline in benchmark indices from their peak levels, highlighting the significant impact of these outflows on market performance. In addition to equity withdrawals, FPIs also exited Rs 4,406 crore from the debt general limit and invested a mere Rs 100 crore through the debt Voluntary Retention Route (VRR) during the review period. Domestic institutional investors (DIIs) and high-net-worth individuals (HNIs) are effectively absorbing the selling pressure. Conclusion In conclusion, the Rs 94,000 crore withdrawal by foreign investors from Indian markets highlights a shift driven by high valuations in India, attractive yields in U.S. bonds, and global economic uncertainties. This trend underscores the need for a balanced approach in Indian markets, ensuring they remain competitive and attractive amidst global volatility and changing investor preferences. Refrence : The times of india Business standard Akhilesh A Prabhu 24240107 Sub code:BM6BPSC500 Subject: CONTEMPORARY BANKING ST. Aloysius Institute of Management and IT Class assignment submitted on partial Fulfillment of credit course.

Foreign portfolio investors put in Rs 13,300 crore in Indian Stock Market Foreign portfolio investors (FPIs) have infused a net Rs 13,300 crore into Indian stock markets in the first two weeks of April on the back of a strong domestic economy and better economic growth prospects. According to depository data, FPIs have invested INR 13,347 crore in Indian stocks this month (till April 12). However, due to fears of changes in the India-Mauritius tax treaty, FPIs sold Rs 8,027 crore on Friday. In the future, concerns over changes in the India-Mauritius tax treaty will weigh on FPI flows, said VK Vijayakumar, chief investment strategist at Geojit Financial Services. This situation may persist until there is clarity on the details of the new treaty. Another major concern is the increasing tension in West Asia. Tension is increasing between Iran and Israel, the impact of which can be seen on FPI investment in the near term. He said that domestic institutional investors (DIIs) have much cash. Apart from this, retail investors and high net-worth individuals i.e. HNIs are optimistic about the Indian market. In such a situation, the selling of FPI will be compensated from here. Himanshu Srivastava, associate director-manager of research at Morningstar Investment Research India, said Indian markets have received huge inflows as Fitch Ratings downgraded China's sovereign credit rating outlook from stable to negative due to growth concerns. He said that apart from this, the expectation of normal monsoon and the expectation of strong growth amid a strong domestic economy has also increased the attraction of FPIs towards Indian markets. Apart from shares, FPIs have made a net investment of Rs 1,522 crore in the debt or bond market during the period under review. FPIs have been investing money in the Indian bond market since the announcement of the inclusion of Indian government bonds in the J.P. Morgan index. They invested Rs 13,602 crore in the bond market in March, Rs 22,419 crore in February, and Rs 19,836 crore in January. Overall, FPIs have invested a total of Rs 24,241 crore in shares so far this year. His investment in the debt or bond market has been Rs 57,380 crore.

Foreign Portfolio Investment (FPI) Foreign portfolio investment (FPI) refers to the purchase of securities and other financial assets by investors from another country. Examples of foreign portfolio investments include stocks, bonds, mutual funds, exchange traded funds, American depositary receipts (ADRs), and global depositary receipts (GDRs). Example of FPI; An example of Foreign Portfolio Investment (FPI) in India is when an overseas investor, such as an institution or individual from another country, invests in Indian stocks. For instance, a U.K.-based investment firm purchasing stocks in an Indian technology company would represent FPI. Question is here why foreign Portfolio Investment in India; Sometimes, foreign market can be less competitive than the domestic market. Hence, FPI gives you an exposure to a wider market. The foreign markets are comparatively less saturated and hence, they may offer higher returns and more diversity as well. Foreign Portfolio Investments provides high liquidity. Foreign portfolio investors (FPIs) have emerged as steady buyers in Indian markets, extending the modest buying streak picked up in February. Market experts have highlighted that the steady resilience in Indian stock markets and strong macroeconomic indicators have pulled back FPIs' interest in equities. FPIs have bought ₹11,823 crore worth of Indian equities and the total inflow stands at ₹15,559 crore as of March 7, taking into account debt, hybrid, debt-VRR, and equities, according to National Securities Depository Ltd (NSDL) data. FPIs infused ₹3,316 crore in debt markets so far this month, extending the positive momentum in bonds picked up in 2023.

By Chiranjivi Chakraborty Indian equities are poised to lure more foreign inflows after the general elections, with the economy’s promising growth prospects and the Federal Reserve’s rate cuts acting as catalysts. That’s the view from Rajiv Batra of JPMorgan Chase & Co., who says global funds’ positioning in India’s $4.3 trillion stock market remains light and investors will use any correction as an opportunity to increase holdings. His views come as overseas flows have become more volatile ahead of the national vote amid concerns over stretched valuations. “Foreign investors who didn’t increase relative positioning in India over last 2-2.5 years waiting for this clearing event, will start focusing back on growth-driven policies or reforms,” Batra, an Asia strategist at JPMorgan, wrote in an email interview. JPMorgan joins Goldman Sachs Group Inc. in predicting more inflows as Prime Minister Narendra Modi is widely expected to extend his decade in power. A third term for the leader is seen promising a continuation of market-friendly policies, spending on infrastructure and a push for foreign direct investment. India will hold general elections over six weeks from April 19, with votes to be counted on June 4. Investors will keenly be watching the seat-sharing arrangements if Modi’s ruling party retains power, said Singapore-based Batra, adding that policy continuity is essential for India’s market to sustain its higher valuation or “even witness further multiple re-rating.” $100 Billion   Batra said that rising investor interest in India is forming a “virtuous cycle” of liquidity, sell-side coverage, investor participation and capital issuance. “We estimate that if all benchmarked investors (EM, Asia ex-Japan, global ex-US and global) simply close their underweight positions on India, this would lead to $100 billion in inflows over the next few years,” he wrote. Global funds’ holdings of Indian stocks stood at $763 billion at the end of February, according to data from the National Securities Depository Ltd. Foreign flows have turned uneven since the second half of last year as a relentless rally in the stock market drove valuations higher. The benchmark NSE Nifty 50 Index is on the verge of erasing all its advance for this year after capping a record eight-year winning streak in 2023, and there have been concerns about speculative froth building in the small- and mid-cap space. The Indian gauge is trading at 20 times its one-year forward earnings estimates, versus a multiple of 12 times for the MSCI Emerging Markets Index. Still, many investors argue that India deserves to trade at a higher premium versus the past as well as versus emerging-market peers given the economy’s superior growth prospects, favorable demographics and the promise of political stability. Global funds are “keen to raise exposure to India and are looking for better entry points,” said

According to the data, FPIs invested a net sum of Rs 1,539 crore in the Indian equities in February. This came following a net withdrawal of Rs 25,743 crore in January | File image Foreign investors made a significant turnaround and injected over Rs 1,500 crore into Indian equities in February, reversing the massive outflows seen in the preceding month, primarily due to robust corporate earnings and positive economic growth. Additionally, Foreign Portfolio Investors (FPIs) continued to be bullish on the debt markets as they put in over Rs 22,419 crore during the month under review, data with the depositories showed. Looking ahead to March, the outlook for FPI flow appears promising, provided the current economic trajectory and corporate performance sustain their positive momentum, potentially continuing to attract foreign investment into Indian equities, Mayank Mehraa, smallcase manager and principal partner at Craving Alpha, said. According to the data, FPIs invested a net sum of Rs 1,539 crore in the Indian equities in February. This came following a net withdrawal of Rs 25,743 crore in January. The latest influx can be attributed to robust corporate earnings and positive economic growth trends observed during the December quarter. Despite perceived stretched valuations in the previous month, the compelling performance of companies justified their value, enticing FPIs to re-enter the market, Mehraa said. Himanshu Srivastava, Associate Director – Manager Research, Morningstar Investment Research India, said that improvement in the global economic environment would have prompted FPIs to invest in high growth-oriented markets like India. Globally, the January inflation numbers in the US were in line with expectations. Though the prices moved up in January, the annual increase in inflation was the lowest in nearly three years, raising expectation of an early rate cut by US Federal Reserve. On the domestic front too, Q3 GDP data showed strong growth, thus attracting foreign investors, he added. V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said inflow came despite the US bond yields ruling high with the 10-year yield at around 4.25 per cent. In terms of sectors, FPIs were big sellers in financials and FMCG in February. On the debt front, FPIs have been injecting money in the debt markets for the past few months driven by upcoming inclusion of Indian government bonds in the JP Morgan Index. They infused Rs 22,419 crore in February, Rs 19,836 crore in January, Rs 18,302 crore in December, Rs 14,860 crore in November, and Rs 6,381 crore in October. JP Morgan Chase & Co. in September last year announced that it will add Indian government bonds to its benchmark emerging market index from June 2024. This landmark inclusion is anticipated to benefit India by attracting around USD 20-40 billion in the subsequent 18 to 24 months. This inflow is expected to make Indian bonds more

🌐 October Sees Record-Breaking FPI Outflow: What’s Shaping Foreign Investment in Indian Equities? 📉 October was a defining month for foreign investments in India, as Foreign Portfolio Investors (FPIs) pulled out an unprecedented Rs 94,000 crore (~$11.2 billion) from the Indian stock market. This marks the highest-ever monthly outflow, attributed largely to India's elevated equity valuations, which have driven global investors towards more attractively valued markets like China. This shift reflects the complexity and dynamism in today’s investment landscape. Key Insights: 1️⃣ High Valuation Pressure: Indian equities have been trading at elevated valuations, prompting a pullback by FPIs in search of better value. Meanwhile, Chinese equities, currently benefiting from stimulus measures aimed at boosting economic growth, have become a more appealing option for global investors. 2️⃣ Sharp Reversal from September: This massive outflow comes on the heels of September’s nine-month high inflows, where FPIs invested Rs 57,724 crore. This swift reversal reflects a changing market sentiment, highlighting the global repositioning of capital in response to both valuation concerns and emerging economic opportunities elsewhere. 3️⃣ Sector Resilience Despite Outflows: Despite significant selling in financial stocks, resilience remains due to fair valuations and strong demand from Domestic Institutional Investors (DIIs) and high-net-worth individuals (HNIs), who continue to absorb these shares, particularly in the financial sector. 4️⃣ Debt Market Impact: FPIs also adjusted their positions in the debt market, withdrawing Rs 4,406 crore from the debt general limit while investing Rs 100 crore via the debt Voluntary Retention Route (VRR), showing a selective approach to India’s debt segment. What Lies Ahead? As FPIs evaluate their next steps, the future trajectory of foreign investments in India will likely be shaped by a combination of global and domestic factors: Global Influences: Geopolitical developments, interest rate shifts, progress in the Chinese economy, and the outcome of the U.S. Presidential election will play significant roles in determining the direction of foreign capital flows. Domestic Dynamics: Inflation trends, corporate earnings, and the impact of seasonal demand during the festive season will be closely watched by FPIs assessing India’s market prospects. Market Snapshot for 2024: Despite October’s large outflows, FPIs have remained net buyers for most of the year, with total net investments now standing at Rs 6,593 crore. This volatility underscores the need for investors to stay informed on global shifts and domestic trends, as both will continue to play pivotal roles in shaping India’s financial markets. #InvestmentManagement #GlobalMarkets #IndianEquities #EconomicTrends #StockMarket