Global funds buy net 3.40 bln rupees of India equities prior trading day: NSDL

Global funds buy net 3.40 bln rupees of India equities prior trading day: NSDL

In a recent development, global funds have shown significant interest in the Indian equity market. According to data from the National Securities Depository Limited (NSDL), global funds bought net 3.40 billion rupees of Indian equities on the previous trading day. This figure underscores the growing international appetite for Indian stocks, driven by factors such as the country's robust economic growth and attractive investment opportunities.

The data from NSDL highlights a trend that has been gaining momentum over the past year. With mutual funds hitting the Reserve Bank of India's (RBI) $7 billion overseas investment limit, investors have been exploring alternative routes to diversify their portfolios globally. One such route is the Liberalised Remittance Scheme (LRS), which allows resident Indians to invest up to $250,000 per financial year in overseas securities, including equities and debt instruments [1].

The LRS route has seen a significant increase in investments, with a 12.45% year-on-year (y-o-y) jump in 2024-25, totaling $1.70 billion. This growth can be attributed to the restrictions on mutual funds and the attractiveness of global diversification. However, the LRS route is not without its challenges, such as the 20% tax charged on remittances exceeding Rs.10 lakh in a financial year.

Another option for resident Indians is investing through GIFT City (Gujarat International Finance Tec-City), India's first International Financial Services Centre (IFSC). GIFT City offers a regulated path for global diversification, with a focus on providing access to international markets. The city has two stock exchanges, India INX and the NSE IFSC, which enable residents to invest in global securities [2].

Investment trends in global equity and debt via LRS ($ million)

The net purchase of 3.40 billion rupees by global funds in Indian equities signifies a positive sentiment towards the Indian market. While the LRS route remains open for overseas investments, GIFT City offers a unique opportunity for Indian residents to diversify their portfolios globally. As GIFT City continues to grow and establish itself as a global financial hub, it is likely to attract more investors seeking to hedge currency risks and gain exposure to international markets.

References:
[1] https://m.economictimes.com/wealth/invest/should-you-invest-in-global-securities-via-gift-city-or-continue-with-direct-lrs/articleshow/123465552.cms
[2] https://m.economictimes.com/wealth/invest/should-you-invest-in-global-securities-via-gift-city-or-continue-with-direct-lrs/articleshow/123465552.cms