FPI inflows grow 20% during Q1

New Delhi The value of foreign portfolio investors’ holdings in the domestic equities reached $626 billion in the three months ended June 2023, which was 20 per cent higher from the year-ago period, according to a Morningstar report.

This could be attributed to good performance in the domestic equity markets as well as strong net inflows from foreign portfolio investors (FPIs). According to the report, the value of FPIs’ investments in Indian equities rose from $523 billion as of June 2022 to $626 billion at the end of June 2023.

On a quarter-on-quarter basis, the value of such investment rose 15 per cent from $542 billion recorded in the three months ended March this year. This has helped in pushing FPIs’ contribution to Indian equity market capitalisation marginally to 17.33 per cent for the quarter under review from 17.27 per cent for the March quarter.

After pulling out funds to the tune of $3.2 billion from the Indian equities in the March quarter, FPIs took a sharp U-turn in the three months ended June and made a strong comeback with a net investment of $12.5 billion.

“The flows were largely driven by the prospects of interest-rate direction in the US, how the global inflation numbers were shaping up, and China’s economic woes, along with domestic indicators. The sentiments broadly remained positive throughout the quarter,” the report noted.

It was a positive start of the quarter with apprehensions about the banking crisis in the US and Europe fading.

Also, there were expectations building that the US Federal Reserve will most likely slow its pace of rate hikes in future, which augured well for foreign money to flow into the Indian equity markets. Additionally, Indian markets also witnessed some consolidation towards the end of the previous quarter, leading to some rationalisation in its valuations. Besides, the resilience of the domestic economy amid uncertain times also prompted FPIs to turn their focus back on Indian stocks.