FIIs pour $16 billion into Indian equity markets in 2023. Here’s why

Foreign institutional investors (FIIs) have poured Rs 1.32 lakh crore, or $16 billion, so far this year into the domestic equity market in 2023. The country managed to attract overseas investors at the time when global economies have been witnessing challenges in the form of slower growth, elevated inflation, fears of recession, India, on the other hand, against the backdrop of stable government policies, robust macro fundamentals have managed to keep sustainable growth rates. Even China’s economy hit some breaks, pushing investors to rely on other emerging countries such as India for better return opportunities. FIIs offloaded shares worth Rs 1.21 lakh crore, or $16 billion, in 2022.

Market watchers on Dalal Street believe that the recent upturn in FPI flow may sustain going ahead. The recent overseas inflows have supported Indian equity markets in the ongoing calendar year. The benchmark equity index BSE Sensex has gained 7.25 per cent on a year-to-date basis till August 24, 2023. The 30-share index rallied 2.80 per cent in 2022.

Sharing his views on FIIs flows, Sujan Hajra, Chief Economist and Executive Director, Anand Rathi Shares and Stock Brokers said that a monthly average of $1 billion in foreign portfolio equity inflows appears likely in the next 6-8 months.

“By the middle of August 2023, the majority of the outflow of foreign portfolio equity money from India during 2022 has already returned. With global monetary tightening nearing an end, global economic growth prospects are improving and India being the world’s fastest growing major economy, there are compelling reasons to believe that foreign portfolio equity money will continue to flow to India over the next six to eight months,” Hajra said.

Tejas Gutka, Fund Manager, Tata Mutual Fund said, “It is difficult to pre-empt the behaviour of investors. However, given that India remains an oasis in a world of uncertainty on growth, inflation, interest rates, as well as geo-political tensions, it would be reasonable to not expect any sharp outflows from the Indian market in the absence of any negative developments. On the other hand, India’s relative valuation premium could act as a cap to high inflows.”

Abhishek Basumallick, Chief Investment Adviser, Intelsense Capital said, “FPI inflows should be positive going ahead. The commentary from global funds has been very positive in the last few months and I expect them to back their views up with money.”

Also read: Hot stocks on August 25, 2023: Brightcom Group, Jio Financial, Texmaco Rail, Vodafone Idea and more

Also read: RIL shares in focus as firm may sell 8-10% additional stake in Reliance Retail: Report