Foreign Portfolio Investments Withdraw Rs 37,632 Cr from Indian Equities in FY23

In a significant development for the Indian financial markets, the Securities and Exchange Board of India (SEBI) released its annual report on August 7, highlighting a remarkable trend in Foreign Portfolio Investments (FPIs).  

According to the report, FPIs pulled out Rs 37,632 crore from Indian equities during FY23. While this figure may seem substantial, it marks a substantial 73.1% decline in outflows as compared to FY22.  

The report also sheds light on the increasing prominence of domestic institutional investors, who played a crucial role in balancing the Indian markets during this period. 

The annual report released by SEBI indicated a turning point in FPI flows to the Indian markets starting from the second quarter of 2022-23.  

During this period, FPI flows began to show signs of improvement, with intermittent instances of moderate selling. However, overall, FPIs withdrew Rs 37,632 crore from Indian equities during FY23. 

The FY22 had seen considerable FPI outflows from the Indian market. However, the situation experienced a remarkable turnaround in FY23, with a significant reduction in outflows. The report reveals that the decline in FPI outflows reached an impressive 73%, reflecting renewed investor confidence in India’s economic prospects. 

One of the crucial factors that contributed to the resilience of the Indian markets during 2022-23 was the role played by domestic institutional investors. These institutional investors demonstrated their confidence in the Indian cash markets by investing a net total of Rs 2.55 lakh crore during the fiscal year. 

Comparing the data, the report indicates that the net FPI outflows from the equity cash market through the stock exchange route stood at Rs 61,754 crore. This underscores the growing significance of domestic institutional investors in countering the impact of FPI outflows and providing stability to the Indian markets. 

The SEBI report attributes the success of domestic institutional investors to the presence of strong domestic liquidity. This robust liquidity acted as a cushion during periods of FPI outflows, helping to mitigate potential disruptions and maintain market stability. 

The availability of ample domestic funds allowed institutional investors to take advantage of investment opportunities, which, in turn, supported the overall growth and performance of the Indian cash markets. The reliance on strong domestic liquidity highlights India’s economic resilience and attractiveness to local investors. 

In conclusion, as the Indian economy continues to recover and expand, it is expected that foreign investors will further explore investment opportunities in the country. With supportive regulatory measures from SEBI and other market regulators, India’s financial markets are poised for a promising future, attracting both domestic and international investments. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet, and is subject to changes. Please consult an expert before making related decisions.