FPI over Rs 1 lakh crore in Indian debt market in 2024 so far

Foreign Portfolio Investors (FPI) have pumped over Rs 1 lakh crore into the Indian debt market in 2024 so far due to the country’s inclusion in JP Morgan’s Emerging Market Government Bond Indices in June this year. 

FPIs remain bullish on the Indian debt market and they have invested Rs 11,336 crore so far in August.

According to National Securities Depository Limited (NSDL) data, Rs 1,02,354 crore has been invested by FPIs in the Indian debt market since the beginning of 2024.

Foreign investors put in Rs 11,366 crore in August so far, Rs 22,363 crore in July, Rs 14,955 crore in June and Rs 8,760 crore in May.

Foreign investors are putting money in the debt market, but are pulling out from the equity markets.

FPIs have pulled out Rs 16,305 crore from Indian equity markets since the beginning of August.

The reasons for this are believed to be Yen Carry Trade, fear of recession in the US and ongoing geopolitical conflicts in the Middle East.

However, foreign investors have pumped Rs 19,261 crore into Indian equity markets in 2024 so far.

The reason for strong buying interest in the debt market by foreign investors is the inclusion of Indian bonds in the JP Morgan Emerging Market Bond Index in June this year.

Indian bonds will have 10 per cent weightage in that index.

The weightage of India's government bonds will be gradually increased in this index in a phased manner from June 28 to March 31, 2025, i.e. by one per cent each in 10 months.

JP Morgan announced the inclusion of Indian bonds in GBI-EM in September 2023.

There are many other reasons for the sharp rise in the foreign inflow in the Indian debt market, experts said, "a high growth rate, stable government, reduction in inflation, financial discipline by the government."

India's GDP growth rate was 8.2 per cent in FY 2023-24. It is expected to grow at the rate of 7.2 per cent in the current financial year.