India's improving macros, rupee stability contribute significantly to pivot in FPI flows
New Delhi, July 12
The changes made by the government in taxation of debt investment have made debt investment in India attractive for FPIs, which is also an important factor contributing to the stability in rupee, according to analysts.
The shift in the stance of FPIs towards India, which turned positive beginning early July, is continuing. The total FPI investment through the secondary market (up to July 10) stands at Rs 5,155 crore.
"Additionally, there has been an investment through the 'primary market and others' category to the tune of Rs 10,001 crore, taking the total investment during this period to Rs 15,156 crore. This is a positive development," said Dr VK Vijayakumar, Chief Investment Strategist, Geojit Investments Ltd.
A significant trend in FPI inflows into India is the steadily increasing share of debt flows.
In July, so far, FPIs have invested Rs 3,228 crore through the General Limit and Rs 6,619 crore through the Fully Accessible Route (FAR) route.
India's improving macros and stability in the rupee have contributed significantly to this pivot in FPI flows, said the analyst.
Weakness in the chip trade and FPIs turning sellers in markets like South Korea also have contributed to the inflows towards India. This trend is likely to continue unless the geopolitical scene in West Asia turns worse, market watchers said.
Last week, markets ended marginally lower, snapping a four-week winning streak amid renewed geopolitical tensions in West Asia and a sharp spike in crude oil prices.
Geopolitical developments remained the primary driver of market sentiment during the week.
Fresh tensions between Iran and the United States resurfaced after Iran reportedly targeted US military installations across Gulf states in retaliation for recent American strikes.
"The renewed conflict briefly pushed Brent crude above the $80 per barrel mark before prices cooled towards $76 by the end of the week, easing some concerns over imported inflation and external sector risks," said Ajit Mishra-SVP, Research, Religare Broking Ltd.
Sectoral performance remained mixed, with stock-specific action dominating market activity. Realty emerged as the top-performing sector, followed by IT and metals, supported by improved sentiment and selective buying.
The market enters the coming week at an important juncture, with macroeconomic data releases, corporate earnings, and geopolitical developments expected to drive sentiment.
— IANS
Reader Comments
This is interesting but we shouldn't get too excited. FPIs are notoriously fickle - they came in when Korea weakened, they'll leave just as fast. We need more domestic investment and manufacturing growth, not just foreign portfolio flows. The real test is job creation.
Good to see India becoming a stable destination for debt investments. The Fully Accessible Route is a smart move. But that geopolitical risk in West Asia is scary - if crude crosses $85, all these gains could reverse. Let's hope diplomacy works. 🤞
As someone working in the financial sector, this is heartening. The ₹15,156 crore inflow in just 10 days shows global confidence in India's economic management. But let's not forget - retail investors still need better protection. Hope SEBI is watching.
Realty sector performing well! That's good for the economy. But I worry about the common man - when FPIs pump money into real estate, it drives up prices. We need affordable housing schemes alongside this foreign investment. Balance is key.
Impressive numbers! But I'm skeptical about the 'improving macros' argument. Our GDP growth is good, but inflation is still a concern for middle-class families. These FPI flows are good for markets, but do they translate to lower prices at the petrol pump? 🧐
V