Japanese foreign portfolio investors (FPIs) hold investments valued at Rs 2.06 lakh crore in Indian stocks, comprising just under 3% of total FPI investments in Indian equities. This places Japan as the ninth largest contributor among countries in terms of total assets under custody (AUC).
Amid global market volatility, particularly after the Bank of Japan raised interest rates, the importance of Japanese investments in India is highlighted. These FPIs represent about 2.88% of the total equity AUC in India, totaling Rs 71.5 lakh crore.
The equity-only analysis ranks Japanese FPIs as the eighth largest group of foreign investors in the Indian market. This is noteworthy as global financial markets have become uneasy due to potential repercussions from a reverse yen carry trade scenario.
The yen carry trade involves borrowing yen at low interest rates and investing in higher-yielding assets like Indian equities. This strategy is favoured not only by forex traders but also by managers of equities, commodities, and bonds.
Despite global uncertainties, the robust performance and promising economic outlook of Indian markets are expected to mitigate impacts and stabilise foreign portfolio investment flows soon.
