India Tops Asian Markets with $1.4 Billion in Foreign Investment This Week

Investments Indian Investments

Posted by NewAdmin on 2025-03-27 08:13:26 |

Share: Facebook | Twitter | Whatsapp | Linkedin Visits: 50

---

After months of aggressive selling, foreign investors have made a strong return to Indian equities, injecting $1.39 billion this week alone—marking the largest inflow across all Asian markets. This marks a stark turnaround from the substantial outflows seen since September 2024, when foreign institutional investors (FIIs) offloaded over $28.18 billion worth of Indian stocks. Since March 20, FIIs have been net buyers, purchasing nearly $2.37 billion in Indian equities, which has bolstered India’s position as a leading investment destination in the region.

In contrast, other Asian markets continued to see outflows, with Taiwan experiencing the highest foreign fund withdrawal at $298 million, followed by Malaysia with $161 million and Thailand at $89 million. The Philippines and Vietnam also saw net outflows of $64 million and $32 million, respectively. Indonesia and South Korea did record some inflows—$158.3 million and $118 million—but India’s inflows have been the standout performance in the region.

The resurgence in FII flows is largely attributed to the liquidity-boosting measures taken by the Reserve Bank of India (RBI) and the growing optimism regarding potential interest rate cuts in the upcoming Monetary Policy Committee (MPC) review in April. The RBI has been actively supporting the banking system through various mechanisms, including daily and long-term Variable Rate Repo (VRR) auctions, USD/INR buy-sell swap auctions, and Open Market Operations (OMO) in government securities. These actions have significantly improved investor sentiment and stabilized Indian financial markets.

A key factor driving increased interest in Indian equities is the recent correction in valuations following an earlier market rally. While equity prices have cooled, India has become a more appealing investment destination, particularly as markets in the US and China remain unpredictable. As a result, Indian stock markets have surged, with the benchmark BSE Sensex and NSE Nifty rising 5.5% since the start of March. Broader market indices have also performed well, with the BSE Midcap index up 9.8% and the BSE Smallcap index up 11.1%, signaling heightened investor enthusiasm.

Despite the positive sentiment, analysts caution that there are still risks on the horizon. Global economic uncertainty, geopolitical tensions, and sector-specific weaknesses could continue to affect market sentiment. While the recent FII inflows signal renewed confidence in Indian markets, some analysts warn that the rally may lack strong, long-term growth drivers. Potential geopolitical risks, including possible retaliatory tariffs from the US, could also dampen investor confidence and influence global capital flows.

While the recent FII inflows are an encouraging sign of renewed faith in India’s markets, experts stress the need for caution, given the evolving global macroeconomic landscape. The sustainability of the current market upswing will depend on factors such as central bank policies, global economic stability, and ongoing trade developments.

Go!