FPIs continues to confidently bet on Indian equities; infuse Rs 30,600 cr in first fortnight of July

FPIs continue to bet on Indian equities; infuse Rs 30,600 cr in first fortnight of July

Foreign Portfolio Investors (FPIs) continued to show unwavering interest in the Indian equity market, with investments exceeding Rs 30,600 crore in the initial two weeks of the current month. This influx of funds can be attributed to several factors, including India’s robust economic growth and impressive corporate earnings.

The Indian economy has been demonstrating resilience and displaying strong growth, which has attracted the attention of foreign investors. With positive macroeconomic indicators and various structural reforms, India has emerged as an attractive investment destination. FPIs recognize the potential for long-term growth and profitability in the country, leading them to allocate significant funds towards Indian equities.

Furthermore, the strong corporate earnings of Indian companies have served as a catalyst for FPI investments. With companies delivering solid financial performance and demonstrating resilience amid challenging times, foreign investors are drawn to the prospects of earning healthy returns on their investments. The impressive corporate earnings reflect the underlying strength and potential of Indian businesses, reinforcing FPIs’ confidence in the market.

The consistent inflow of funds from FPIs reflects their positive sentiment and belief in the Indian equity market. This investment trend not only strengthens the market but also contributes to the overall growth and development of the Indian economy. The confidence displayed by FPIs underscores India’s position as an attractive investment destination and bodes well for the future prospects of the equity market.

If the current trend of FPI investments in the Indian equity market continues, it is expected that the investment figures for July will surpass those recorded in May and June. In May, FPIs invested Rs 43,838 crore, while in June, they invested Rs 47,148 crore. These substantial inflows highlight the growing confidence and interest of foreign investors in the Indian market.

Data from the depositories indicates that the total inflow in the equity market has already reached Rs 1.07 lakh crore in the year so far. This showcases the significant contribution of FPIs to the overall investment landscape in India. The continuous inflow of funds from FPIs underscores their positive outlook on the Indian economy, strong corporate performance, and attractive investment opportunities.

The consistent and robust FPI investments in the Indian equity market serve as a testament to the country’s economic growth prospects and the investor-friendly environment. Such investments contribute to the overall liquidity, market stability, and development of the Indian capital market.

Market analysts anticipate a positive outlook for Foreign Portfolio Investor (FPI) inflows into Indian equities, expecting the trend to remain broad-based. However, there are concerns regarding the increasingly stretched valuations in the market. Comparatively, valuations in China are currently considered highly attractive when compared to those in India. As a result, the “Sell China, Buy India” policy followed by FPIs may not be sustainable in the long term, according to V K Vijayakumar, Chief Investment Strategy at Geojit Financial Services.

Data indicates that FPIs have been consistently investing in Indian equities since March, with an infusion of Rs 30,660 crore recorded so far this month (as of July 14). This figure includes investments made through bulk deals, primary market participation, and stock exchanges.

While the overall trend remains positive, market participants are keeping a close eye on valuations and potential shifts in FPI investment strategies. The attractiveness of Indian equities to FPIs will continue to be influenced by factors such as economic performance, corporate earnings, policy reforms, and global market dynamics. Monitoring these factors will be crucial to understanding the future trajectory of FPI inflows into Indian equities.

Prior to March, overseas investors had withdrawn a collective amount of Rs 34,626 crore from the Indian equity market in January and February. However, the scenario has since changed, and foreign portfolio investors (FPIs) have been consistently making significant investments in Indian equities. The reasons behind this trend are attributed to several factors, as highlighted by industry experts.

Sonam Srivastava, Founder of Wright Research, believes that FPIs’ continuous buying can be attributed to various factors, including India’s robust economic growth, strong corporate earnings, and relatively competitive valuations of Indian equities compared to other markets. The country’s attractive story is further reinforced by the emergence of the capital expenditure cycle, the revival of Indian manufacturing, and the strength of the banking sector.

Divam Sharma, Founder of Green Portfolio, emphasizes that one of the major reasons for the inflows has been the investments made into Adani group companies. Additionally, there is confidence among investors in the United States that the Federal Reserve will soon start reversing interest rates and the chances of a recession in the US are minimal. These factors are triggering a rally in US markets and increasing the appetite for growth markets, including India.

Overall, the influx of FPI investments into Indian equities is driven by a combination of factors such as India’s economic growth potential, strong corporate performance, attractive valuations, specific investments in prominent companies, and global market dynamics. These factors collectively contribute to the positive sentiment and confidence of foreign investors in the Indian equity market.

The decline in the US dollar index below 100, reaching its lowest level in one year, has been advantageous for emerging markets. India, in particular, has been the largest recipient of Foreign Portfolio Investor (FPI) flows among emerging markets year-to-date, according to V K Vijayakumar of Geojit Financial Services.

In addition to equity investments, overseas investors have also injected Rs 1,076 crore into the Indian debt market during the reviewed period. In terms of sectors, FPIs have shown continued interest in financials, automobiles, capital goods, real estate, and fast-moving consumer goods (FMCG).

The significant FPI investments in these sectors have contributed to the surge in stock prices within these segments and have propelled the Sensex and Nifty indices to record highs. The buying sprees by FPIs have played a substantial role in driving market performance and investor sentiment.

The combination of a weaker US dollar and sustained FPI interest across various sectors has bolstered India’s position as an attractive investment destination, leading to increased inflows and market growth.