FPI inflows at `15,000 cr in debt mkt in Feb

New Delhi: Foreign Portfolio Investors (FPIs) continued their bullish stance on India’s debt markets with a net infusion of over Rs15,000 crore so far this month, on the back of inclusion of Indian government bonds in the JP Morgan Index along with relatively stable economy.

This followed a net investment of Rs19,836 crore in January, making it the highest monthly inflow in more than six years. This was the highest inflow since June 2017, when they infused Rs25,685 crore. On the other hand, foreign investors pulled out more than Rs3,000 crore from equities during the period under review. Before this, they withdrew a massive Rs25,743 crore in January, data with the depositories showed. “The main trigger for this divergent trend in equity and debt is the high valuation in the Indian equity market and the rising bond yields in the US,” said VK Vijayakumar, chief investment strategist, Geojit Financial Services.

Himanshu Srivastava, Associate Director (research), Morningstar Investment Research India, attributed the outflow from equities to the uncertainty surrounding the interest rate environment, both domestically as well as globally.

According to the data, FPIs made a net investment of Rs15,093 crore in the debt markets in this month (till February 9). With this, the total investment by FPIs reached over Rs34,930 crore in 2024. They have been injecting money in the debt markets for the past few months. FPIs infused Rs18,302 crore in the debt market in December, Rs14,860 crore in November, and Rs6,381 crore in October.

“The Indian debt markets witnessed a reversal in FPI flow trend last year after the announcement of inclusion of Indian government bonds in the JP Morgan Index. This was one of the major drivers for the robust flows from FPIs, along with relatively stable economy,” Srivastava said.