FPIs stay glued to Indian equities; infuse ₹16,405 crore in June so far
FPI flows touched a nine-month high of ₹43,838 crore in equities in May BY PTI
FPIs stay glued to Indian equities; infuse ₹16,405 crore in June so far
Foreign portfolio investors (FPIs) have shown a sustained interest in Indian equities, as their investments in the market continue to grow for the fourth consecutive month. In June, FPIs infused a substantial amount of ₹16,405 crore into Indian equities, reflecting their confidence in the country’s economic recovery and positive growth prospects.
The data from depositories indicates a significant surge in FPI flows, with May recording the highest inflow in nine months at ₹43,838 crore. This was followed by inflows of ₹11,631 crore in April and ₹7,936 crore in March. It is worth noting that during January and February, FPIs had withdrawn over ₹34,000 crore from the Indian market.
The consistent inflow of funds from FPIs signifies their increasing trust in the resilience of the Indian economy and the potential for earnings growth in the corporate sector. The positive trend in FPI investments is also driven by global consensus on stronger economic reforms and measures leading up to the 2024 elections, which has bolstered the confidence of foreign investors.
Furthermore, the recent pause in interest rate hikes by the US Federal Reserve, after a series of consecutive increases, has improved overall market sentiments and risk appetite among investors. This has prompted them to redirect their investments toward Indian shores.
In terms of sectors, FPIs have been actively buying stocks in the financials, automobiles, auto components, capital goods, and construction-related sectors. However, they have been sellers of stocks in the IT, metals, power, and textiles sectors.
Market analysts and experts anticipate that FPIs will continue to show interest in the Indian market throughout the month, driven by the ongoing economic recovery, positive corporate earnings, and supportive policy environment. However, they also caution that valuation concerns due to the surging Indian markets and the possibility of stricter regulatory norms could temper the inflow of foreign funds to some extent.
Alongside their investments in equities, FPIs have also allocated ₹550 crores to the debt market during the period under review. This can be attributed to the attractive yields offered by Indian debt securities, which have drawn foreign investors looking for income-generating opportunities.
Overall, in 2023, foreign investors have made substantial investments in Indian equities, amounting to over ₹45,600 crores, while also allocating close to ₹8,100 crores to the debt markets. These investments play a significant role in enhancing liquidity, stability, and growth in the Indian financial markets while providing FPIs with opportunities to participate in India’s economic progress.
Market experts expect FPIs to sustain their interest in the Indian market based on the current investment trend. The ongoing economic recovery, positive corporate earnings, and supportive policy environment are cited as critical factors that are likely to drive the continued inflow of funds.
However, there are potential concerns on the horizon. Valuation of Indian markets, which have been experiencing a surge, could become a cause for concern. Additionally, the possibility of stricter regulatory norms may pose some constraints on foreign investment inflows into India.
Overall, the sustained inflow of funds from FPIs reflects confidence in the Indian economy’s recovery prospects and the attractive investment opportunities it offers. Strong corporate earnings, government policies, and the overall conducive investment environment support the positive sentiment. While challenges such as market valuation and regulatory norms exist, the prevailing factors are expected to maintain FPIs’ interest in the Indian market for the foreseeable future.
According to recent data, foreign portfolio investors (FPIs) have continued their positive investment trend in Indian equities. From June 1 to June 16, FPIs invested a net sum of ₹16,406 crore in Indian equities.
Market experts attribute this sustained investment to India’s strong economic rebound and positive growth outlook. FPIs are increasingly confident in the resilience of the Indian economy and the potential earnings of the corporate sector. The global consensus regarding stronger economic reforms and measures leading up to the 2024 elections has also bolstered FPIs’ confidence.
The pause in interest-rate hikes by the US Federal Reserve has further improved investor sentiments and risk appetite, diverting investments toward India.
FPIs have been buying stocks in financials, automobiles, auto components, capital goods, and construction sectors. However, they have sold stocks in the IT, metals, power, and textiles sectors.
Experts expect continued investment in auto stocks due to the strength in passenger car sales and the recovery of two-wheeler sales. FMCG stocks are also likely to perform well as rural demand is expected to recover, and falling input costs have improved company margins.
Since benchmark indices are near record levels and valuations are rich, some profit bookings may occur in the near term.
In addition to their investments in equities, foreign portfolio investors (FPIs) have also shown interest in the Indian debt market. During the period under review, FPIs invested ₹550 crores in the debt market, driven by the attractive yields offered by Indian debt securities.
Looking at the overall trend in 2023, FPIs have already made substantial investments in both Indian equities and the debt markets. In Indian equities, foreign investors have put in over ₹45,600 crore. This demonstrates their confidence and continued interest in the Indian stock market. Similarly, FPIs have invested close to ₹8,100 crores in the debt markets, indicating their willingness to diversify their investment portfolios and explore opportunities in fixed-income securities in India.
The significant inflows from foreign investors highlight the attractiveness of the Indian market, driven by factors such as the country’s strong economic rebound, positive growth outlook, and various reforms implemented by the government. The availability of higher yields in the debt market has also attracted FPIs looking for income-generating opportunities.
These investments contribute to the overall liquidity and stability of the Indian financial markets while providing avenues for foreign investors to participate in the country’s economic growth.
