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Monday, February 26, 2024

FPIs are increasing their debt instrument investments while decreasing their equity holdings


<p>Foreign portfolio investors (FPIs) withdrew funds from the Indian equity markets in November, but they increased their purchases of debt instruments, which led to a net inflow of foreign funds of Rs 1,525 crore as of November 10, according to data from National Securities Depository Ltd (NSDL).<img decoding=”async” class=”alignnone wp-image-278476″ src=”https://www.theindiaprint.com/wp-content/uploads/2023/11/theindiaprint.com-fpis-are-increasing-their-debt-instrument-investments-while-decreasing-their-equit.jpg” alt=”theindiaprint.com fpis are increasing their debt instrument investments while decreasing their equit” width=”774″ height=”515″ title=”FPIs are increasing their debt instrument investments while decreasing their equity holdings 9″ srcset=”https://www.theindiaprint.com/wp-content/uploads/2023/11/theindiaprint.com-fpis-are-increasing-their-debt-instrument-investments-while-decreasing-their-equit.jpg 275w, https://www.theindiaprint.com/wp-content/uploads/2023/11/theindiaprint.com-fpis-are-increasing-their-debt-instrument-investments-while-decreasing-their-equit-150×100.jpg 150w” sizes=”(max-width: 774px) 100vw, 774px” /></p>
<p>October saw a staggering Rs 24,548 crore withdrawal by FPIs from Indian stocks, which caused the stock markets to become erratic. The steep increase in US bond rates and the geopolitical unpredictability brought about by the Israel-Hamas conflict were the main causes of the outflow of foreign capital.</p>
<p>In October, FPIs made investments totaling Rs 6,382 crore in Indian debt securities that were deemed to be comparatively less hazardous. Given that FPIs have already invested Rs 6,053 crore in debt in the first ten days of November, the trend seems to be continuing.</p>
<p>FPI investments are referred to as “hot money” as they have the potential to evaporate quickly, depreciating the local currency and crashing the stock market.</p>
<p>Both the abrupt withdrawal of FPI money from the stock markets and the increase in oil prices, which have raised demand for dollars, have contributed to the Indian rupee’s recent decline to its lowest level.</p>
<p>According to market watchers, although there is still a net outflow of foreign institutional money from Indian equities, the rate has decreased from the previous month.</p>
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