FPIs Shift to Debt Over Equity Amid Global Volatility: Economic Survey
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Moneycontrol•29-01-2026, 12:51
FPIs Shift to Debt Over Equity Amid Global Volatility: Economic Survey
- •Foreign portfolio investors (FPIs) are increasingly buying Indian debt securities while selling equities in FY26, as per the Economic Survey 2025-26.
- •Factors like Indian equities' underperformance, trade uncertainties, rupee depreciation, and high U.S. bond yields drove FPI equity sell-offs, especially in IT and healthcare.
- •FPIs were net buyers of equities in Q1 FY26 but became net sellers in Q2 and Q3, with outflows of around Rs 16,500 crore from Indian equities by January 13, 2026.
- •The narrowing then widening of the 10-year Indian and US government bond yield spread influenced the attractiveness of Indian debt.
- •Despite equity outflows, the FPI asset base under custody grew by 10.4% to Rs 81.4 lakh crore by December 31, 2025, largely due to debt accumulation and valuation gains.
Why It Matters: FPIs are favoring Indian debt over equities due to global volatility and specific market factors, as highlighted by the Economic Survey.
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