The total Foreign Portfolio Investments (FPI) in Indian equities dropped 11% to $542 billion in the March quarter of 2021, compared to $607 billion in the December quarter of 2020, according to the latest data from the Reserve Bank of India.
The sharp decline in FPIs was primarily due to the increased volatility in the Indian equity markets in the first quarter of 2021. The markets witnessed a sharp correction in the first few weeks of the quarter, due to rising bond yields and a surge in coronavirus cases in India. This led to investors becoming cautious and reducing their exposure to Indian equities.
However, the markets recovered in the later part of the quarter, as vaccine rollout increased and the government announced stimulus measures to revive the economy. This helped the FPIs to return to the Indian equity markets in the later part of the quarter.
Overall, the FPIs invested a net amount of $1.4 billion in Indian equities during the March quarter, which was significantly lower than $27.4 billion invested in the December quarter.