FPIs’ net investments cross Rs 51,000 cr in 2021; more likely in New Year

Waves of foreign portfolio investments worth over Rs 51,000 crore splashed into the Indian market in 2021 as overseas investors turned net buyers of domestic securities for the third straight year while excess global liquidity and other factors steered the ebb and flow of their investing ways.

With the global financial system still flush with liquidity, emerging market assets, especially equities, might well remain the preferred investment avenue for many more months to come, experts opined.

As the equities sizzled during most of 2021, that also saw economy slowly coming back into the recovery path, Foreign Portfolio Investors (FPIs) turned net buyers but their investment is much less compared to net inflows of Rs 1.03 lakh crore in 2020. And last year’s quantum was lower than Rs 1.35 lakh crore investments made by them in 2019.

Mirroring the roller-coaster ride for foreign portfolio investment flows in the Indian market this year, FPIs emerged as net buyers for six months, including three months continuously starting from January. In June, August and September also, these investors made net investments and the remaining six months witnessed net FPI outflows.
Excess liquidity in the global financial system, resurgence of concerns over the coronavirus pandemic, rising global inflation as well as higher valuation of Indian equity markets are among the mix of factors that influenced FPIs.

Source:The Economics Times