FPI takes a cautious approach during the general elections. Infusion of Rs 1,156 cr in May

Foreign investors have taken a “wait and see” attitude during the ongoing general elections and have pumped in Rs 1,156 crore in the first two trading sessions this month. This comes after FPIs sold shares worth Rs 870 billion in April on concerns about changes in India-Mauritius tax treaty and the continued rise in US bond yields. Before that, FPIs had net investments of Rs 35,098 crore in March and Rs 1,539 crore in February.

In two days of trading in May, foreign portfolio investors (FPIs) invested Rs 1,156 crore in equity and sold Rs 1,727 crore in debt, depository data showed.

“With the general elections in full swing in India, foreign investors have adopted a wait-and-see approach for the election results,” said Himanshu Srivastava, associate director and manager at Morningstar Investment Research India.

Moreover, a mixed batch of U.S. data did little to shake the perception that the economy remains strong, suggesting the Fed may delay its first interest rate cut until later this year, he added.

“The latest U.S. employment data shows that a slowing economy may require interest rate cuts. Wage growth falling below 4% also reflects a weakening labor market. From a stock market perspective, this is good news. That’s why U.S. The market rallied sharply on Friday,” said VK Vijayakumar, chief investment strategist at Geojit Financial Services. On the other hand, FPIs withdrew Rs 1,727 crore from the debt market during the period under review. Before these outflows, foreign investors had invested Rs 13,602 crore in March, Rs 22,419 crore in February and Rs 19,836 crore in January. These inflows were soon followed by the inclusion of Indian government bonds in JP Morgan indices. JP Morgan Chase & Co announced last September that it would add Indian government bonds to its benchmark emerging markets index from June 2024. This landmark inclusion is expected to benefit India by attracting approximately $20-40 billion over the next 18-24 months. .

Morningstar’s Srivastava said the trend will likely continue to depend on expectations about where interest rates will head in the future.

Overall, total inflows so far in 2024 were Rs 3,378 crore in equity and Rs 43,182 crore in debt markets.