In the ever-evolving landscape of India’s capital markets, a recent study has shed light on the intricate dance of Foreign Portfolio Investment (FPI), revealing patterns that could reshape investment strategies and economic policies. Led by Nishita Thakrar from the Department of Commerce at Atmiya University in Rajkot, Gujarat, the research delves into the equity and debt flows from 2019 to 2024, offering a comprehensive analysis of the factors driving these financial tides.
The study, published in the ‘International Journal of Emerging Research in Engineering, Science, and Management’ (translated to English as ‘International Journal of Emerging Research in Engineering, Science, and Management’), examines the macroeconomic and global influences that have steered FPI in India. Thakrar’s work highlights significant fluctuations in FPI inflows and outflows, attributing these shifts to geopolitical tensions, monetary policy changes, and global uncertainties, including the COVID-19 pandemic.
“Our analysis reveals that FPI flows are not just numbers on a screen; they are deeply influenced by a complex web of global and domestic factors,” Thakrar explains. The research identifies key correlations between FPI movements and domestic economic indicators such as interest rates, exchange rates, and market capitalization. This understanding is crucial for investors and policymakers alike, as it provides a clearer picture of the forces at play in India’s financial markets.
For the energy sector, these insights could be particularly impactful. As foreign investors navigate the volatility of global markets, understanding the drivers of FPI can help energy companies attract and retain investment. “By recognizing the patterns and triggers of FPI flows, energy sector stakeholders can better position themselves to capitalize on inflows and mitigate the impacts of outflows,” Thakrar suggests.
The study’s findings also underscore the importance of robust economic indicators and stable policies in attracting foreign investment. As India continues to grow as a global economic powerhouse, the ability to understand and influence FPI flows will be critical. Thakrar’s research not only provides a retrospective analysis but also offers a roadmap for future developments in the field.
In an increasingly interconnected world, the insights from this study could shape investment strategies and economic policies, ensuring that India’s capital markets remain resilient and attractive to foreign investors. As Thakrar’s work demonstrates, the key to unlocking these opportunities lies in understanding the intricate interplay of global and domestic factors that drive FPI flows.