FPIs invest almost ₹4,800cr in Indian equities this week
What's the story
Foreign portfolio investors (FPIs) have made a strong comeback in Indian equities, investing ₹4,794 crore in the week ending yesterday. The surge was mainly due to major inflows on April 13 and 16, which compensated for a slight dip observed midweek. The turnaround comes as the Indian rupee stabilizes and West Asia's geopolitical tensions ease with a recent ceasefire agreement.
Investment factors
Cautious stance persists amid US-Iran negotiations
The Reserve Bank of India's (RBI) efforts to stabilize the rupee and the recent ceasefire in West Asia have made India an attractive destination for foreign investment. However, despite these developments, FPIs have withdrawn nearly ₹45,000 crore in April alone. Analysts believe that investors are remaining cautious due to ongoing US-Iran negotiations and global uncertainties.
Market trends
FPI inflow of ₹3,717.44cr across all asset classes
According to data from the National Securities Depository Limited (NSDL), FPIs recorded a net inflow of ₹3,717.44 crore across all asset classes this week. This includes equity, debt, hybrid and mutual funds. The trend is in stark contrast to the overall negative sentiment observed in April so far, with Dr V K Vijayakumar of Geojit Investments noting that "FPIs continued selling in April taking the total sell figure for April through 17 to ₹44,929 crore."
Market influences
Currency dynamics driving change in equity flows
Dr. Vijayakumar attributed the change in equity flows to currency dynamics, saying, "RBI's strong action curbing excessive speculative activity in the currency markets has reversed the trend of sustained rupee depreciation." Himanshu Srivastava from Morningstar Investment Research India said that easing geopolitical tensions in West Asia and cooling crude oil prices have moderated fears of inflationary pressures and global rate cuts.