Foreign portfolio investor flows turn to a trickle as Fed taper nears

Net investment in Indian equity market lowest in 19 months

Monetary tightening by the world’s major central banks, including the US Federal Reserve (US Fed), has begun to negatively impact foreign capital inflows into India. There has been a sharp slowdown in equity investments by foreign portfolio investors (FPIs) after a big surge in the second half of 2020 and the first half of 2021.

The net FPI investment in the Indian equity market in the last 12 months has been the lowest in 19 months. The FPIs have made net investment worth $1.26 billion during the February 2021 and January 2022 period, down from $3.77 billion in the 12 months