According to a report by Bank of Baroda, foreign portfolio investments (FPI) into India showed a notable recovery after a slow start, reaching a cumulative total of $28.7 billion in 2023. The report anticipates that this positive trend will persist, contributing to the likely appreciation of the Indian rupee.
The report highlighted that FPI into India concluded at $28.7 billion in the previous calendar year. It noted the outperformance of the equity segment and observed an encouraging trend in the debt segment, especially in the latter part of the year.
Several factors contribute to the positive outlook for India's FPI inflows, including improved corporate profitability, stable domestic macros, controlled inflation, and a stable political environment. The report also pointed out India's inclusion in JP Morgan's bond index in June 2024 as a key driver for FPI inflows in the debt segment. Hopes for India's inclusion in other bond indices further support this trend.
The report predicts that this positive momentum in FPI inflows is likely to continue and gain momentum in the first two quarters of 2024. Consequently, it forecasts a positive impact on the Indian rupee, expecting it to trade with an appreciating bias throughout 2024.
(With Agency Inputs)
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