Foreign Institutional Investors Continue to Invest in India Amidst Economic Resilience
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Mumbai, Dec 28 (NationPress) In the face of stock market fluctuations driven by geopolitical challenges, foreign institutional investors (FIIs) have continued to be net investors in India throughout the year, indicating the country's substantial economic resilience, according to market analysts on Saturday.
As of December 27, 2024, FIIs have divested equities worth Rs 119,277 crore through exchanges. However, contrasting this selling behavior, they have injected Rs 120,932 crore into the primary market, as reported by experts referencing data from the National Securities Depository Limited (NSDL).
“This indicates that FIIs are net investors in India this year. The selling through exchanges has primarily been influenced by high valuations, while the investments in the primary market are due to more favorable valuations,” explained Dr V.K. Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
The wave of selling by FIIs observed in October and November saw a decline in December.
While there was sporadic buying by FIIs in early December, they resumed selling, although not as consistently as in the preceding months.
“A notable trend in FII investment is their consistent equity investments through the primary market. Up until December 27, FIIs have invested Rs 17,331 crore in the primary market,” added Kumar.
This pattern of selling via exchanges while purchasing through the primary market has been evident throughout the year in 2024.
In the debt market, FIIs have invested Rs 112,409 crore thus far this year, according to NSDL data.
Market analysts suggest that FIIs may revert to selling equities early in 2025 due to the strengthening dollar (with the dollar index above 108) and the appealing yields on US 10-year bonds, currently around 4.4 percent.
“FIIs are likely to resume buying in India when positive indicators of growth and earnings recovery emerge,” they noted.
Manoj Purohit, Partner and Leader of Financial Services Tax at BDO India, stated that following a couple of months of substantial downturns, the capital markets have seen a resurgence from foreign investors this month.
A significant achievement is the record-breaking investments via the FDI route, surpassing the $1 trillion milestone.
“The resurgence of foreign investors in India can be attributed to multiple factors, including recent policy shifts in the US affecting peer nations, the stabilization of geopolitical tensions in the Middle East, controlled inflation, and interest rate management,” explained Purohit.
