India will witness record foreign investment inflows of $10.1 billion by December 2023; Details here

An inflow of $10.1 billion in December 2320 is the highest monthly inflow ever recorded in a single month, a Bank of Baroda study shows.

Mumbai: The last month of 2023 saw a major financial milestone in India: a staggering $10.1 billion inflow, charting as the highest ever in a single month. This statistic, according to a report published by the Bank of Baroda, marks a radical change in the foreign investment flows (FPI) flowing into the Indian landscape. Looking back at 2023, the financial report revealed that India had brought in a whopping $28.7 billion, a stark contrast to the recorded outflows of $17.9 billion in the previous year. This positive shift clearly indicates the increasing confidence of foreign investors in the Indian markets, according to a report by news agency IANS.

FPI inflow in 2023 highest since 2017

“The inflows in 2023 were the highest since 2017, when FPIs poured in $30.8 billion into the domestic market. However, true to their nature, FPI flows showed high volatility throughout the year,” the report said. The report states that after a dismal start, FPI flows into India have accelerated, reaching a total of $28.7 billion by 2023.

“While the equity segment continued to outperform, there was also an encouraging trend in the debt segment, especially in the last few months of the year,” the report said.

Reasons behind the increase in FPI inflows

It said improved corporate profitability, stable domestic macros, inflation within a range and a stable political environment favor India as a preferred investment destination. According to the report, India’s inclusion in JP Morgan’s bond index on June 24 and hopes that India could subsequently be included in other bond indices have been the key drivers of FPI inflows into the debt segment.

“The trend is likely to continue and accelerate in the first two quarters of 2024,” the report said. It said this will be positive for INR, which is likely to trade on an upward trend in 2024.

First two quarters with good FPI inflow, says BoB Report

After a dismal start, foreign portfolio investment (FPI) into India has gained momentum, reaching a total of $28.7 billion by 2023, according to a Bank of Baroda report. The report also said that the trend will continue and be positive for the Indian rupee, which is likely to appreciate. According to the report, FPI to India closed last calendar year at 28.7 billion.

“While the equity segment continued to outperform, there was also an encouraging trend in the debt segment, especially in the last few months of the year,” the report said. It also said that improved corporate profitability, stable domestic macros, inflation within a range and a stable political environment favor India as a preferred investment destination.

“India’s inclusion in JP Morgan’s bond index in June 2024 and hopes that India could subsequently be included in other bond indices have been the key drivers of FPI inflows into the debt segment,” the report said. It is said that the trend is likely to continue and increase faster in the first two quarters of 2024.

“This will be positive for the Indian rupee, which is likely to trade on an upward trend in 2024,” the report said.

(With input from agencies)