FPI Pour Record-Breaking ₹1.71 Lakh Crore Into India’s Market In 2023
Foreign portfolio investors, often abbreviated as FPIs, have shown a tremendous interest in India’s market this year. In 2023, they invested a record-breaking amount of Rs 1.71 lakh crore in Indian stocks. This is the highest amount ever invested by FPIs in India, surpassing the previous record.
December 2023 alone saw an exceptional investment of Rs 66,135 crore, making it the month with the highest investment in a single month. This surge in investment indicates that international investors are finding India’s market very attractive, even amid uncertainties and fluctuations in the global economy.
The reasons behind this significant investment are multiple. India’s stock market, particularly the Nifty 50 and Sensex indexes, have performed well this year, gaining over 18% and 19% respectively. This strong performance has attracted foreign investors.
Additionally, political stability in India, especially after the state election results that favored the BJP in key states, has also played a role. The US Federal Reserve’s hint at reducing interest rates further encouraged FPIs to invest in India.
Another factor contributing to this influx is the robust economic performance of India. The country has seen a revival in private capital expenditure, high government infrastructure spending, record tax collections, and healthy corporate earnings growth. All these factors combined have made India an attractive destination for foreign investments.
Interestingly, a significant portion of the FPI investment, around Rs 46,323.81 crore, came through initial public offerings (IPOs). This shows that foreign investors are not just investing in existing stocks but are also interested in new businesses entering the market.
Sector-wise, the financial services and capital goods sectors attracted the most FPI investments. However, there were also considerable investments in the automobile and auto components sectors. On the other hand, the oil and gas and IT sectors saw the most withdrawals.
Moreover, India’s inclusion in JPMorgan’s Emerging Market Global Bond Index has also spiked foreign investment in the domestic debt market, reaching a six-year high.
Looking ahead to 2024, experts remain optimistic about continued FPI inflows. Factors like strong corporate earnings and political stability are expected to keep attracting foreign investors.
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Additionally, sectors like infrastructure, real estate, and banking might see significant growth, especially considering 2024 is an election year in India.
This ongoing interest from FPIs reflects confidence in India’s economic and political environment, making it a sought-after destination for global investors.
