Foreign Portfolio Investors (FPIs) infused more than Rs 18,500 crore in the Indian debt markets in February so far, continuing their bullish outlook after JP Morgan announced the inclusion of Indian government bonds in its index. On the other hand, investors maintained a cautious stand about Indian equities and withdrew Rs 424 crore during the period under review. Earlier in January, the investors dumped Indian equities worth Rs 25,743 crore, official data with the depositories revealed.
This investment followed the investors pouring in over Rs 19,836 crore in the debt markets in January, which remained the highest inflow seen since June 2017. Commenting on the market movements, Kislay Upadhyay, smallcase Manager and Founder, Fidelfolio, noted, “With introduction of India in global bond indices this year, Indian debt inflows should get steady flows going ahead. Also, further front-loading before actual inclusion in June this year is also expected. This is also in line with long-term aim to deepen our underdeveloped debt-markets,” reported PTI.
The official data revealed that FPIs invested Rs 18,589 crore in the debt markets in India, till February 23, taking the overall FPI investment well over Rs 38,426 crore in 2024.
Bhuvan Rastagi, Co-Founder and COO, Per Annum and Lendbox, stated, “They have been injecting money in the debt markets for the past few months. FPIs infused Rs 18,302 crore in the debt market in December, Rs 14,860 crore in November, and Rs 6,381 crore in October. The upcoming inclusion in JP Morgan EMBIGD in June 2024 is a major driver for the huge inflow in the debt market.”
Other factors like stable macroeconomic conditions, healthy yield, and strong Indian currency have also played a part in increasing the appeal of the debt markets for the FPIs. Notably, earlier last year in September, JP Morgan Chase & Co announced that it will include Indian government bonds in its benchmark emerging market index, effective from June 2024. This decision is expected to help India and bring in nearly $20-40 billion in the following 18 to 24 months, experts noted.
V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said, “The resilience of the market is preventing FPIs from selling aggressively despite attractive bond yields in the US.”
Bharat Dhawan, MD, Mazars in India, expressed his agreement and added, “The Indian market continues to captivate international interest, signifying not only the resilience of the economy but also the trust global investors place in its growth trajectory.”
The overall FPI flows for 2023 touched Rs 1.71 lakh crore in equities and Rs 68,663 crore in the debt markets, bringing in a total infusion of Rs 2.4 lakh crore in the capital market.
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