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Foreign Portfolio Investment Surges in Indian Equities

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Foreign investors inject billions into Indian stock market, boosting confidence.

description: a bustling stock exchange floor with traders from around the world, symbolizing the global nature of foreign portfolio investment.

Prepared by Michael Fidora and Martin Schmitz. Published as part of the ECB Economic Bulletin, Issue 4/2019. In 2018 the financial account of the euro area saw a significant increase in foreign portfolio investment (NYSE:FPI) flows, reflecting a growing interest in global markets. This trend was particularly evident in emerging economies like India, where foreign investors have played a crucial role in driving economic growth.

After two years of being sellers, foreign portfolio investors (FPIs) turned buyers and infused a whopping Rs 2.06 trillion in Indian equities, signaling their confidence in the country's market potential. This influx of foreign capital has helped boost liquidity and valuations in the Indian stock market, providing a much-needed stimulus for economic expansion.

Foreign portfolio investors reduce stake in Indian equities to a decade low, but robust inflows indicate continued confidence in the market. Despite a slight decrease in ownership, foreign investors remain bullish on India's growth prospects and are actively seeking opportunities to capitalize on the country's expanding economy.

The U.S. net international investment position, the difference between U.S. residents' foreign financial assets and liabilities, has also seen a significant increase in foreign portfolio investment. This highlights the interconnectedness of global financial markets and the importance of foreign capital inflows in driving economic development.

India's stock markets have become the fourth largest in the world, overtaking Hong Kong's, as investors flock to a fast-growing alternative. The country's robust economic fundamentals and attractive investment climate have positioned it as a preferred destination for foreign portfolio investors seeking high returns and diversification.

New Delhi: The resilience of the Indian stock market and the improving macros of the Indian economy forced the foreign portfolio investors to reevaluate their positions and increase their exposure to Indian equities. This shift in sentiment reflects the growing confidence in India's economic outlook and the potential for sustained growth in the coming years.

Indian Stock Markets: The overseas flows into Indian equities may remain positive during FY25 amidst favorable macros as FPI ownership in the country's stock market continues to rise. Foreign investors are increasingly recognizing the long-term growth potential of India and are actively allocating capital to capitalize on this opportunity.

India Business News: Foreign investors have surged with optimism, injecting over Rs 2 lakh crore into Indian equities in FY 2023-24. This influx of foreign capital has bolstered market sentiment and provided a much-needed boost to the Indian economy, paving the way for sustained growth and development.

The SEBI (Foreign Portfolio Investors) Regulations, 2019 (“FPI Regulations”) governs FPIs investing in India. It outlines the eligibility criteria, categories, and Regulations for foreign portfolio investors looking to participate in the Indian market. These Regulations aim to ensure transparency, accountability, and investor protection in the foreign investment process.

foreign portfolio investmentfpisindian equitiesmarket confidenceeconomic growthglobal marketscapital inflowsinvestment climateregulatory frameworkmarket sentimentNYSE:FPI

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