$30 billion: FPI investments in the Indian market in FY21.

Business Standard
10th February

$30 billion: FPI investments in the Indian market in FY21.

  • Foreign Portfolio Investors have so far invested $31.7 billion in 2020-21. They had last pumped big money into the country in 2012-13, when they had invested $25.8 billion.
  • After the Budget, FPIs pumped in over $1 billion in Indian equities. One reason for their optimism is the improving prospects of the economy. The growth-oriented Budget announced by the Finance Minister has also reinforced their positive outlook.
  • The overarching reason, of course, is that there is a lot of liquidity floating around in the global markets, which is finding its way into emerging economies, including India.
  • FPI inflows are expected to continue unless the global central banks, especially the US Federal Reserve, change their stance and start sucking liquidity out of the markets, or begin to raise interest rates in the wake of inflation.
  • However, given the weak state of the economy, a reversal of stance by the US Fed may be some time away.
  • Such massive inflows have pushed valuations within the Indian market to expensive levels. If the strong earnings growth prospects that analysts are projecting don't materialise, the markets could turn risky.

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