So far in September, foreign portfolio investors (FPIs) have been net purchasers in Indian markets, investing a total of Rs 16,305 crore. On a net basis, foreign investors invested Rs 11,287 crore in shares and Rs 5,018 crore in debt between September 1 and 17, according to depositories data. The entire net investment at this time was Rs 16,305 crore.
Investment in Indian equities has reportedly been unpredictable for some time. The continued surge in Indian stock markets, on the other hand, would have been difficult for FPIs to ignore, and they would have preferred to be a part of it rather than miss out. In addition, from a long-term viewpoint, India remains an important and competitive investment destination.
Positive inflows of USD 2,597 million, USD 535 million, USD 290 million, USD 162 million, and USD 71 million have been recorded in Taiwan, South Korea, Thailand, Indonesia, and the Philippines, respectively.
Following the Federal Reserve’s tapering of quantitative easing, foreign direct investment (FDI) into Indian equity markets may decline. In general, when the US Federal Reserve raises interest rates, foreign portfolio investors (FPIs) flee emerging nations like India, which are seen as riskier than industrialised economies.
In 2021, IPO investment accounted for 74% of all FPI flows
The IPO rush in India has definitely captured the attention of foreign portfolio investors (FPIs). Their investment trend in Indian shares over the last eight months demonstrates this.
FPIs’ net investment in Indian shares between January 1 and August 30 totaled Rs 49,403 crore, according to depositories data. Over 74 percent of the total inflow, or Rs 36,577 crore, came through primary markets, compared to Rs 12,826 crore invested through stock exchanges. In fact, the primary market outperformed the secondary market in five of the last eight months, including August.
In July, foreign institutional investors (FIIs) sold Rs 11,308 crore worth of Indian equities. FPIs have net sales in the cash market in August as well. Only when the FPI investment in the main market is included in the August data are the figures favourable. In this inflated market with no margin of safety, the FPI selling in stock appears sensible.
Further Key Takeaways
Investments in initial public offerings (IPOs), qualified institutional buying (QIB), and rights issues are examples of FPI inflows into the primary market. In the recent year, the primary market has gained traction, with approximately 38 initial public offerings (IPOs) being listed on exchanges. The majority of the firms were in the online service, chemical, FMCG, and pharmaceutical industries.
Prior to the current calendar year, the primary market received more FPI investments than the secondary market in 2017, which is considered India’s “golden year” for IPOs. According to reports, almost 150 IPOs were held this year, with India Inc raising $11.6 billion in total. In 2018, FPI inflows into the primary market totaled Rs 18,761 crore, compared to a secondary market outflow of Rs 51,774 crore.
The year 2021 has already seen 38 mainboard IPOs, with firms generating approximately 72,000 crore, including very popular IPOs such as Zomato’s Rs 9,375 crore issuance and PowerGrid InvIT’s Rs 7,735 crore IPO, among others.
According to recent Bloomberg data, China’s crackdown on technology businesses is forcing foreign investors to seek fresh possibilities across Asia, contributing to a record surge in initial public offerings (IPOs) from India to South Korea that shows no signs of stopping.
Frequently Asked Questions (FAQs)
What does the term FPI stand for?
Holding financial assets from a country other than the investor’s own is known as foreign portfolio investment (FPI). Stocks, ADRs, GDRs, bonds, mutual funds, and exchange traded funds are all examples of FPI holdings.
How does FPI work?
When a firm invests in a business entity in another nation, it is known as a foreign direct investment (FDI). Foreign enterprises engaging in FDI are directly involved in the day-to-day activities of the other country. This implies they’re contributing more than just money; they’re also bringing knowledge, skills, and technology.