The decision has been taken amid an increase in the market size. Cash equity markets' trading volumes have more than doubled between FY 2022-23 and FY 2024-25.
While flows continued to be negative, the analysts noted that they paint a skewed picture with strong preferences for few themes and fading confidence in others.
In a letter to the market regulator, leading funds have said that they fear the planned move may create fragmentation of market volumes and distort prices due to two settlement cycles.
According to the data with the depositories, FPIs sold shares to the tune of Rs 3,412 crore during November 1-3. FPIs have been on a selling spree since the start of September.
According to the data with the depositories, Foreign Portfolio Investors (FPIs) sold shares to the tune of Rs 20,356 crore this month.
The requirement will come into force from October 1, the Securities and Exchange Board of India (Sebi) said in a circular.
If this trend continues, investment by FPIs in July will exceed the figures recorded in May and June, which were Rs 43,838 crore and Rs 47,148 crore, respectively, V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.
While foreign investors resumed purchases of Indian equities, markets face a risk of them diverting funds to cheaper emerging markets
Net outflow by Foreign Portfolio Investors (FPIs) from equities reached Rs 1.98 lakh crore so far in 2022, data with depositories showed.
After six months of selling spree, FPIs turned net investors in the first week of April and invested Rs 7,707 crore in equities.
FPIs have been pulling funds out of the Indian markets since October 2021 and the quantum of outflow in February 2022 is highest since March 2020 when overseas investors had pulled out Rs 1,18,203 crore.
The move is aimed at further increasing depth and liquidity in commodity derivative markets.
In October, FPIs remained net sellers at Rs 12,437 crore.
"Foreign brokerages like Merril Lynch, UBS and Nomura have downgraded India due to excessive valuations. This might have prompted FPIs to sell on a sustained basis," said V K Vijayakumar, chief investment strategist at Geojit Financial Services.
According to the depositories data, FPIs withdrew a net amount of USD 1 billion (Rs 6,844 crore) from equities during February 1-16.
Concerned over the Tata-Mistry feud impacting stock valuations, foreign investors are approaching Sebi as well as the independent directors and management of Tata Group companies to ensure that interests of minority shareholders in the listed entities are protected.
The Finance Ministry hopes that foreign portfolio investors' (FPIs) exposure to the domestic bond markets will rise from the present 65 per cent of their permissible ceiling of USD 51 billion.
With an aim to make it easier for overseas investors, regulator Sebi is considering allowing some categories of Foreign Portfolio Investors (FPIs) to directly trade in Indian markets, starting with debt segment.
Foreign investors have pumped in nearly Rs 6,800 crore (USD 1 billion) into the country's capital markets so far this month, driven by global and domestic factors.
The Dispute Resolution Panel (DRP) has directed withdrawal of the MAT levy on FPIsbringing cheer at the turn of the year. This is a clear indication of the Government‘s resolve in implementing a stable and predictable tax regime for the FPIs - in which investors typically churn over time and the tax cost is factored on daily basis.
The rupee opened lower at 66.25 per dollar as against the last weekend's level of 66.14 per dollar at the Interbank Foreign Exchange (Forex) market and dropped further to 66.52 per dollar before ending the week at 66.46 per dollar, showing a loss of 32 paise or 0.48 percent.
There is now a possibility that more such FPIs will file cases and challenge the revenue department‘s notices on MAT in due course.
Dipan Mehta, Member, BSE & NSE is more upbeat on private banking and NBFC space over PSU banks with exception of State Bank of India.
Analysts expect the inflows to accelerate further going ahead, helped by clearance of reform bills for insurance, coal and mining, as also on assurances on controversial issues like General Anti Avoidance Rules (GAAR).