Long term FDI trend in India will remain positive- Jefferies
Jul 19, 2024
New Delhi [India], July 19 : The foreign direct inflows in India will continue to surge as long as the "China plus one" strategy combined with the production-linked incentive (PLI) schemes are working, highlights a report by Jefferies, an investment banking and capital markets firm.
"The long-term trend has also got to be for rising FDI as the "China plus one" strategy, combined with the production-linked incentive (PLI) schemes" said the report.
The report highlighted that India's manufacturing story is finally developing. Apple moving its production facility to India is a major success story for India in attracting FDI investment.
The report pointed out that the FDI inflows to the Indian markets have been very high in recent times but the net investment remains low because of the fear of volatility and profit makings by foreign investors.
"FDI in gross terms was USD 71 bn last fiscal year, the same as the year before. But in net terms, it was only USD 11bn, the lowest level in more than a decade. The reason for this is interesting to GREED & fear" said the report.
The current booming markets of India which is reaching new heights every second day is making it very volatile. Foreign investors may again reduce their investments because of the higher valuation of the Indian markets.
The report stated that India's booming market and attractive valuations are best suited for the PE (private equity) industry to unload investments.
"India's booming market and attractive valuations, from a seller's standpoint, makes it surely the best market globally for the PE industry to unload investments. Indeed, there could well be pressure from head offices to sell down more in India than the local offices would like" said Jeffries report
The net investment by the foreign investors stands at around USD 14.6 bn (Rs 1.22 lakh crore) in the current calendar year, suggests the National Securities Depository Limited (NSDL) data.
However, the net investment in July by the foreign investors in the equity market stands at Rs 25,719 crore.
The Foreign Institutional Investors were sellers in January, April, and May, cumulatively selling equities worth around Rs 60,000 crores. However, they were buyers in February, March, and June, with cumulative purchases amounting to Rs 63,200 crores.
