India's GIFT City is gaining traction among foreign portfolio investors, who are opting for it over traditional investment routes via the stock market. In a turnaround from April's selling spree, foreign investors are increasing their holdings in debt securities as the JP Morgan Index shows a positive trend. Foreign holdings in India's debt market have surged, with FPI investment in the voluntary long-term route hitting $508 million in May.
However, foreign portfolio investors are heading to the exit when it comes to stocks in the financial services sector. But there are two sources of potential market volatility as FPIs increase short exposure on index futures ahead of election results. The U.S. net international investment position, the difference between U.S. residents' foreign financial assets and liabilities, is also a key indicator to watch.
Foreign Portfolio Investors (FPIs) have been offloading Indian shares due to various factors, while domestic investors maintain market strength. Despite this, FPIs made record monthly purchases of Indian equities totalling 661.35 billion rupees ($8 billion) in December. In recent months, the Indian stock markets have experienced a notable trend of foreign portfolio investors (FPIs) pulling out their investments.