Foreign portfolio investors (FPIs) have made a strong comeback in the Indian market, with a net investment of over $1 billion in the last five trading sessions. This resurgence comes after a period of volatility during the elections, where foreign investors were continuously selling off their holdings. However, following the formation of the National Democratic Alliance (NDA) government, investor confidence has been restored, leading to renewed foreign investments.
According to data from the National Securities Depository, FPIs had a net investment of USD 805.82 million on June 10, followed by USD 317.82 million on June 11. The trend briefly shifted on June 12 when FPIs sold off USD 285.32 million, resulting in a negative net investment for the day. This was quickly reversed on June 13 with FPIs investing USD 326.46 million, culminating in a record buying spree on June 14 with USD 644.61 million invested.
The total investment by FPIs over these five trading sessions now stands at an impressive USD 1.45 billion, highlighting the renewed confidence in the Indian market. This influx of foreign capital is a positive indicator for the Indian economy, reflecting the political stability and policy continuity offered by the new government. The return of FPIs suggests that uncertainties surrounding the elections have been effectively mitigated.
In May, FPIs sold equities worth Rs 25,586 crore, indicating a pattern of sustained and excessive selling in the cash market. For the year 2024 so far, FPIs have divested equity worth Rs 26,428 crore. However, a notable trend in FPI activity is the considerable selling through exchanges while simultaneously buying through the primary market route. This indicates a strategic shift in investment patterns by foreign investors.
The market is gradually stabilizing following the high volatility triggered by the election results, including both exit polls and the actual outcomes. The upcoming budget will also provide a policy direction for the new government, and the market is expected to adjust itself according to the budget announcements. Overall, the return of FPIs to the Indian market signifies a positive outlook for the economy and investor sentiment.
