FPI Investment Update: Foreign investors (FPIs) who invested in the Indian market in June-July this year have now become sellers. They have sold shares worth more than Rs 13,400 crore so far in the month of August. FPIs have made this withdrawal from the Indian stock market amid the ending of Yen carry trade and fears of recession in America. On the other hand, foreign investors invested Rs 6,261 crore in the bond market i.e. debt market till August 9 this month.
FPI investment in the stock market so far this year
Earlier in July, FPI investment of Rs 32,365 crore came in due to expectations of strong economic growth, continuation of reforms and better than expected company results. In June also, net investment of Rs 26,565 crore came in due to political stability and sharp rise in the markets. However, before this, in May, FPIs had withdrawn Rs 25,586 crore due to election shocks and in April, more than Rs 8,700 crore due to concerns over changes in India’s tax treaty with Mauritius and continued rise in US bond yields. FPIs had made a net investment of Rs 35,098 crore in shares in March and Rs 1,539 crore in February, while in January they had withdrawn Rs 25,743 crore.Depository data shows that so far this year, FPIs have made a net investment of Rs 22,134 crore in the Indian equity market.
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So many crores have been invested in the bond market so far this year
Foreign investors invested Rs 6,261 crore in the bond market till August 9 this month. Earlier in July 2024, their investment in the bond market was Rs 22,363 crore. In June, foreign investors invested Rs 14,955 crore in the bond market. In May 2024, FPIs invested Rs 8,761 crore. In April this year, FPIs withdrew Rs 10,949 crore from the bond markets. In the bond market, foreign investors invested Rs 13,602 crore in March, Rs 22,419 crore in February and Rs 19,836 crore in January. Overall, so far in 2024, the figure of investment by foreign investors in the bond market has reached Rs 97,249 crore.
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What do experts say
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said that if the market remains bullish in the future, foreign investors may sell more. The reason for this is that the valuation of the Indian equity market remains comparatively high. According to the data, foreign investors have made a net withdrawal of Rs 13,431 crore from the equity market so far in the month of August.
Vijayakumar said the withdrawals in August were due to the closure of yen carry trade after the Bank of Japan raised interest rates by 0.25 per cent and fears of recession in the US.
Himanshu Srivastava, co-director and research manager, Morningstar Investment Research India, said that this increased further due to the increasing geopolitical tensions, especially the growing conflict between Israel and Iran. Due to this, foreign investors also reduced their risk. Apart from this, foreign investors were motivated to book profits in view of the high valuation of Indian markets. Srivastava said that factors such as weak employment data, growing fears of recession in the US and uncertainty about the timing of interest rate cuts also led to withdrawal from the Indian market. FPIs were continuously selling financial services stocks in the fortnight ended July 31. However, during this period they bought information technology (IT), vehicles, capital products and metals.
