2023 in Review: FPI inflows recorded at ₹1.65 lakh crore, highest since 2020; will the trend continue?
₹1.21 lakh crore in 2022, foreign portfolio investors (FPIs) returned as buyers in 2023, buying Indian equities worth ₹1.65 lakh crore. This was the highest FPI inflow since 2020 when buying stood at ₹1.7 lakh crore. This came on the back of improving macros, markets on a record-high streak, declining inflation, hopes of a rate cut in 2024, and the possibility of the incumbent government returning for a third term in the general elections next year.
In 2023, the Indian stock market began with a downtrend but rebounded strongly later in the year. The Nifty index recorded a notable year-to-date return of +18%. Mid and small-cap stocks surpassed expectations, delivering impressive returns of +40% and +50%, respectively.
The market saw the introduction of 57 mainboard IPOs. Specific sectors, such as defence, realty, autos, public sector enterprises (PSEs), and pharmaceuticals, emerged as major performers. However, new-age businesses presented a mixed picture in terms of performance during this period.
On the economic front, India achieved the status of the fifth-largest global economy and maintained its position as the fastest-growing, despite concerns about economic downturns in other developed nations. The Reserve Bank of India implemented a repo rate increase to 6.5% in February but later adopted a pause to balance between addressing inflationary pressures and sustaining growth rates. The Israel-Hamas war, though unexpected, did not disrupt the overall upward trend in the market.
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