Foreign Portfolio Investments in FAR Government Securities Rise by Nearly ₹8,000 Crore in Early November

Foreign portfolio investors (FPIs) increased their investments in Indian government securities under the Fully Accessible Route (FAR) by nearly ₹8,000 crore in the first week of November. Data compiled by PTI from the Clearing Corporation of India (CCIL) shows that FPI holdings in FAR government securities rose to ₹3.65 lakh crore on November 9, up from ₹3.57 lakh crore on November 2.

This increase of ₹7,968.782 crore comes amid broader macroeconomic shifts, including a strengthening rupee and easing bond yields. During the same period, the Indian rupee appreciated to 93.74 against the US dollar compared to 94.90 on November 2. Simultaneously, the yield on the 10-year benchmark government security declined by nearly 0.14 per cent, resting at 7.178 per cent on Monday compared to 7.315 per cent at the start of the month.

Market analysts note that the rupee's recovery was supported by a combination of softer crude oil prices, stronger foreign fund inflows, and hopes of easing geopolitical tensions in West Asia. Brent crude oil prices eased to $96.41 per barrel on Monday, down from over $105 per barrel prior to the US mid-term results. Additionally, positive sentiment from a rally in global artificial intelligence-related stocks encouraged foreign investors to re-engage with Indian markets.

The combination of capital inflows and lower crude oil prices helped relieve pressure on the domestic currency. For overseas investors, an appreciating rupee improves dollar-denominated returns. Meanwhile, declining bond yields generate mark-to-market gains on existing bond holdings, enhancing the overall attractiveness of Indian government securities.

This recent uptick follows a sustained period of capital outflows by foreign investors driven by global interest rate concerns, currency volatility, and uncertainty regarding India's inclusion in global bond indices. CCIL data indicates that FPI investments in FAR securities had dropped sharply by ₹17,054.216 crore over the prior three months. Foreign investors pulled back ₹5,615.212 crore in October, ₹10,592.894 crore in September, and ₹846.11 crore in August before the turnaround in early November.

"The recent inflow of nearly ₹8,000 crore into FAR government securities highlights how sensitive foreign portfolio investments are to macroeconomic variables like crude oil prices and currency stability. While the previous three months saw consistent outflows due to global uncertainties, this recovery demonstrates that easing bond yields and a strengthening rupee can quickly restore investor confidence in Indian debt markets. Founders and business leaders must closely monitor these macroeconomic shifts, as foreign capital flows directly influence overall liquidity and market sentiment in the broader economy." — Dr. Shishir Gupta, Founder & CEO, StartupLanes