Foreign Investors Remain Bullish on India Despite Geopolitical Tensions

Foreign investors have demonstrated their confidence in India's equity market by injecting Rs 14,167 crore so far this month, undeterred by the ongoing tensions between India and Pakistan. This significant inflow is attributed to positive global cues and India's robust domestic economic fundamentals.

A Turnaround in Investment Trends

Following a net investment of Rs 4,223 crore in April, which marked the end of a three-month withdrawal streak, foreign portfolio investors (FPIs) have continued their capital infusion into May. This comes after substantial outflows in the previous months, highlighting a positive shift in investor sentiment.

Expert Insights on Future Investments

VK Vijayakumar, chief investment strategist at Geojit Investments, predicts that global macroeconomic factors, including the weakening US dollar and the economic slowdown in the US and China, alongside India's strong GDP growth and declining inflation rates, will sustain FPI inflows. However, debt inflows are expected to remain subdued.

Domestic and Global Factors Fueling Optimism

Himanshu Srivastava of Morningstar Investment points to a combination of favorable domestic and global conditions, such as the potential US-India trade agreement and the strengthening Indian rupee, as key drivers behind the renewed investor interest. Additionally, impressive quarterly earnings from major Indian corporations have further enhanced market optimism.

On the debt front, while FPIs withdrew Rs 3,725 crore from the general debt limit, they invested Rs 1,160 crore in the debt voluntary retention route, indicating a selective but strategic approach to investment in India's debt market.