FPIs withdraw `325 crore from Indian equities in April 1st week

NEW DELHI: FPIs have turned cautious as they pulled out Rs 325 crore from Indian equities in the first week of this month owing to relatively high valuations and the upcoming general elections.

The net outflow came after a staggering investment of Rs 35,000 crore in March and Rs 1,539 crore in February, data with the depositories showed.

According to the data with the depositories, FPIs withdrew Rs 325 crore from Indian equities this month (till April 5).

On the other hand, FPIs have made a net investment of Rs 1,215 crore in the debt market during the period under review.

Indian government securities (G-Sec) 10-year yield standing at 7.1 per cent and the US 10-year at 4.3 per cent present a compelling case for FPIs. The risk-reward ratio is prompting them to shift their focus from equities to the higher yields offered by bond instruments in the US and India.

Moreover, FPIs have been pumping money into the debt markets for the past few months, driven by the upcoming inclusion of Indian government bonds in the JP Morgan Index.

They invested Rs 22,419 crore in February, Rs 19,836 crore and Rs 18,302 crore in January.

JP Morgan Chase & Co, in September last year, announced that it will add Indian government bonds to its benchmark emerging market index from June 2024.

This landmark inclusion is anticipated to benefit India by attracting around $20-40 billion in the subsequent 18 to 24 months.

This inflow is expected to make Indian bonds more accessible to foreign investors and potentially strengthen the rupee, thereby, bolstering the economy.

On the other hand, FPIs have made a net investment of Rs 1,215 crore in debt market during the period under review