FPIs invested a net sum of Rs 29,436 crore into equities and Rs 5,673 crore into debt segment between November 2-13, According to the depositories data.
A net amount of Rs 35,109 crore was pumped by overseas investors in Indian markets.
What is FPI?
Foreign Portfolio Investment (FPI) refers to securities and other financial assets held by foreign investors.
Such investment does not provide direct ownership of a company’s assets to the investor Instead, the investors hold passive ownership, i.e. the investment remains relatively liquid based on the volatility of the market.
FPI along with Foreign Direct Investment (FDI) are the two important modes of funding for most economies.
In economics, foreign portfolio investment is the entry of funds into a country where foreigners deposit money in a country’s bank or make purchases in the country’s stock and bond markets
Why FPI is Important?
Foreign portfolio investment gives investors an opportunity to engage in international diversification of portfolio assets, which in turn helps achieve a higher risk-adjusted return.
For example, The global stock market operates in such a way that the factors that drive the London Stock Exchange at any given time are different from those that prevail in Taiwan.
This means that an investor who has stocks in different countries will experience less volatility over the entire portfolio.
Preceding Month FPI
FPIs had invested a net sum of Rs 22,033 crore in the preceding month.
Comment from RIL securities
“Indian markets continue to outperform and have continued to offer FPIs better risk reward propositions in terms of corporate earnings recovery and reform measures undertaken by the government to revive investment activities in the country.”
“Additionally, weaker dollar index and absence of quality value play at reasonable valuations in FPIs” home markets have further given them reason to move allocation to emerging markets like India.”
FPIs are expected to remain optimistic on Indian markets.
Agriculture in form of auto exposure, pharma, IT, select private banks are attractive sectors to continue to keep on the radar, market experts said.