The Foreign Portfolio Investments or FPIs are in news again. According to reports, the FPIs have pulled out Rs 325 crore from the Indian markets. The reasons behind the development is said to be based on the relative high valuation of the stocks. In addition, another major reason is the upcoming general elections.
The elections often lead to some volatility. Nevertheless, the markets reacted positively to results in previous elections in 2014 and 2019.
Nevertheless, this refrain or restrain from aggressive, bullish investments often stems from the detection of the fundamental tenets of investments, which is directly connected to policy making, which in turn is derived from aspects including tax rates in the immediate sense, then the interest rates and in the long-term, the growth prospects of the system in place.
FPIs are crucial as it allows investors from one country acquiring securities or other financial assets in another country. | X
This, according to reports, is where new developments like the Indian government bonds' induction into the coveted JP Morgan index. These factors, in the past have led to bullish investment in the Indian bond market.
30 Billion in 2 Years
Therefore, it is to be noted that the market saw a net outflow of Rs 35,000 crore in March.
FPIs are crucial as it allows investors from one country acquiring securities or other financial assets in another country. These investments, therefore encompass a wide range of assets, including stocks, bonds, mutual funds, exchange-traded funds (ETFs), American depositary receipts (ADRs), and global depositary receipts (GDRs).
Once the elections conclude, the potential stability, along with the aforementioned factors will aid the markets, and according to PTI reports, could fetch around USD 30 billion in the two years.
