Foreign investment has increased in the Indian stock market this month. According to Business Times news, foreign investors have so far invested more than 38 thousand crore rupees in the Indian stock market in March.
The world’s advanced economies managed to avoid a recession last year. On the other hand, it was anticipated that the economy would contract as a result of the worldwide rise in policy interest rates in different nations. Additionally, the Indian economy is now growing faster. Experts assert that these two factors are the primary draws for foreign investors to the Indian stock market.
March is the last month of the Indian financial year. In the last month of the financial year, this enthusiasm of the investors towards the Indian stock market was noticeable. Last month, i.e., February, foreign investors invested only 1,039 crore rupees in the Indian stock market. Foreign investors sold shares valued at Rs 25,743 crore in January. As a result, there has been a net foreign investment of 13, 893 crore rupees in the Indian market thus far this year, and 55, 480 crore rupees in the bond market.
Himanshu Srivastava, manager of Morning Star Investment Research India, says that the improving global economy and the positive image of the Indian economy are two reasons why foreign investors are interested in the Indian market. But more recently, the market has fallen somewhat, creating new investment opportunities. Experts believe that GDP growth of more than 8 percent in the last three quarters and the prospect of a policy rate cut by the Reserve Bank are also providing new fuel. It is expected that the RBI will cut the policy interest rate by 25 to 50 basis points in the second half of the new financial year, starting next month.
Foreign investors have largely sold shares in the past week. According to experts, due to some caution, they sold shares worth about 31.4 billion dollars.
This year is the general election in India. Analysts believe that investors are taking a somewhat cautious stance as a result. After the general elections, JPMorgan Chase & Co. predicts that more foreign investment will flow into the Indian stock market. Investors are expected to be attracted by India’s explosive economic growth and the potential for a drop in the Federal Reserve’s policy interest rate.
The market capitalization of India’s stock exchanges crossed four trillion dollars last year. Now it is 4 lakh 30 thousand billion dollars. Currently, the stock exchanges in the world whose market value is higher than that of India are the New York Stock Exchange, Nasdaq, China’s Shanghai Exchange, Euronext, Japan Stock Exchange, and Shenzhen Stock Exchange.
Brokerage firm CLSA believes that India will become the world’s third-largest economy in the next few years. India will overtake Japan by 2027. Then, by 2047, India’s economy will reach 29 trillion, or 29 million dollars.
According to CLSA, by 2027, India’s economy will rank third globally. India’s economy will only lag behind that of the US and China. In 2052, India’s GDP is expected to surpass that of the United States. The total value of the Indian stock market will rise at a rate equal to or greater than that of GDP growth.
