Foreign portfolio investors (FPIs) have returned to buying Indian stocks this month, ending their two-month selling spree. This change came as the Indian markets stabilised and the ‘VIX’ volatility index dropped. FPIs had started pulling out investments at the beginning of the 2024-25 fiscal year due to various reasons, including the 2024 Lok Sabha elections, better performance in Chinese markets, central banks’ cautious approach, and other global factors.
Return to Investment
In June, FPIs invested ₹12,170 crore in Indian equities. By June 21, their total net investment, including debt, hybrid funds, and equities, reached ₹25,085 crore. This data comes from the National Securities Depository Ltd (NSDL). Out of this, ₹10,575 crore was invested in debt instruments.
Key Factors Behind the Shift
Several factors contributed to the recent FPI investment:
- Market Stability: The Indian stock market has seen reduced volatility, making it more attractive for foreign investors.
- Improved Sentiment: The recent election results brought some political stability, further boosting investor confidence.
- Global Trends: Despite previous concerns about rising US bond yields and changes in India’s tax treaties, the overall sentiment has turned positive.
Broader Investment Landscape
The recent FPI activity suggests a renewed interest in Indian markets after a period of caution. With the reduction in market volatility and political uncertainty, FPIs are once again seeing opportunities in India’s growth story.
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