After good investment in Indian stock markets in 2023, foreign investors reduced their investments to a great extent in 2024. FPI investment this year was more than Rs 5,000 crore. The main reason for this was investors adopting a more cautious approach amid high valuations and geopolitical uncertainties. Vineet Bolinjkar, head of research at Ventura Securities, says that 2025 may see an improvement in investment by foreign portfolio investors (FPIs) in the Indian stock market. This will be supported by a cyclical uptick in corporate earnings, especially in sectors like capital goods, manufacturing, infrastructure.
However, high valuations and cheap alternatives in other emerging markets such as ASEAN and Latin America may deter investment. Bolingkar said that apart from this, concerns arising due to a prolonged global recession could affect investor sentiments and their interest in risk assets.
According to news agency PTI, on the other hand, Anand Rathi Wealth Limited Deputy CEO Firoz Aziz said that geopolitical tensions, interest rate cuts by the central bank and possible US tariff restrictions are creating favorable conditions for FPI investment in Indian markets. Can do.
How much less is investment than last year?
According to data available with depositories, FPIs have made a net investment of more than Rs 5,052 crore in Indian stock markets till December 24 in 2024. A net investment of Rs 1.12 lakh crore has been made in the debt market. Earlier in 2023, FPI had made a net investment of Rs 1.71 lakh crore in the stock market. In contrast, net selling of Rs 1.21 lakh crore was recorded in 2022. However, there were FPI investors in the previous 3 years 2019, 2020 and 2021. FPIs were sellers in the months of January, April, May, October and November in the year 2024. So far in the month of December, foreign investors have invested more than Rs 20,071 crore in Indian shares.
Chinese market attracted FPI
Himanshu Srivastava, associate director-manager research at Morningstar Investment Research India, said the low investment in the Indian stock market was mainly due to high valuations. Investors invested in the attractively priced Chinese stock market. This shift was further fueled by stimulus measures introduced by China to boost economic growth. Additionally, the increase in geopolitical tensions, particularly the Israel-Iran conflict, is increasing risk aversion, pushing investors towards safer assets.