FPIs take cautious approach amid ongoing general elections: Foreign investors ‘watch and wait’ due to general elections in India (wait and watch) are adopting the policy. In the first two trading sessions of the current month, foreign investors i.e. FPI bought Indian shares worth only Rs 1,156 crore. Earlier in April, FPIs had sold shares worth Rs 8,700 crore due to concerns over changes in India’s tax treaty with Mauritius and continued rise in bond yields in the US. Whereas in March, FPI had invested a net amount of Rs 35,098 crore in shares and in February, Rs 1,539 crore. According to depository data, in the first two trading sessions in May, foreign investors bought shares worth Rs 1,156 crore and withdrew Rs 1,727 crore from the debt market i.e. bond market.
FPIs withdrew Rs 1,727 crore from the bond market in the first two trading sessions in May.
According to the data, foreign investors have withdrawn Rs 1,727 crore from the bond market in the first two trading sessions of May. Foreign investors had withdrawn Rs 10,949 crore in April. Earlier, foreign investorsDuring March, Rs 13,602 crore was invested in the bond market, Rs 22,419 crore in February and Rs 19,836 crore in January. This investment came from the announcement of inclusion of Indian Government bonds in the JP Morgan index. Overall, so far in 2024, foreign investors have invested Rs 3,378 crore in shares and FPI investment in the bond market has been Rs 43,182 crore.
What do experts say
Himanshu Srivastava, Associate Director – Manager Research, Morningstar Investment Research India, believes that the Lok Sabha elections are in full swing in the country. In such a situation, foreign investors are adopting a ‘watch and wait’ approach until the results of the general elections are announced. Additionally, a mixed batch of US data has barely shaken the perception that the economy remains strong, suggesting the Federal Reserve may make its first interest rate cut later this year. He said that going forward, FPI inflows will continue to be driven by the expectation of the direction in which interest rates are going.
VK Vijayakumar, chief investment strategist of Geojit Financial Services, said that the latest jobs data in America indicates a slowdown in the economy. Wage growth is less than 4 percent, indicating weakness in the labor market. This is good news from the stock market perspective. This is the reason why there was a strong rise in the American markets on Friday.
This investment was driven by the upcoming inclusion of Indian government bonds in the JP Morgan index. JPMorgan Chase & Co had announced in September last year that it would include Indian government bonds in its benchmark emerging markets index from June 2024. This historic inclusion is expected to benefit India by attracting approximately US$20-40 billion over the next 18 to 24 months. The inflows are expected to make Indian bonds more accessible to foreign investors and potentially strengthen the rupee, thereby boosting the economy.
