Foreign Portfolio Investment Trends in India: A Study of Equity and Debt Segment

Abstract

This study examines the trends and behavior of Foreign Portfolio Investment (FPI) in India's equity and debt markets during the period from 2015 to 2025. Foreign portfolio investment serves as an important source of capital for emerging economies and plays a significant role in influencing market liquidity, investment activity, and overall financial market performance. The research focuses on understanding the factors that drive FPI movements and evaluating their implications for India's financial system. The study investigates the influence of both domestic and international macroeconomic conditions on foreign investment decisions. During the selected period, global financial markets experienced considerable uncertainty due to various economic and political developments. Events such as the COVID-19 pandemic, geopolitical conflicts, changing investor sentiment, and shifts in monetary policies by major central banks had a substantial impact on the direction and volume of portfolio investments. These factors contributed to significant variations in FPI inflows and outflows across India's capital markets. The research analyzes the relationship between FPI trends and key economic indicators, including interest rates, exchange rate fluctuations, and market capitalization. The findings reveal that foreign investment flows are highly responsive to changes in economic conditions and market expectations. The study also identifies important patterns in investment behavior and highlights the sensitivity of portfolio capital to both global and domestic developments. Overall, the research provides valuable insights into the dynamics of FPI and its role in shaping the performance and stability of India's financial markets.