Foreign Portfolio Investors (FPIs) poured Rs 47,148 crore into Indian shares in June, the greatest inflow in ten months, buoyed by the country’s continuously improving macroeconomic fundamentals.
Inflows may be muted in July, however, as FPIs may adopt a cautious approach in light of recent statements from the US Federal Reserve. Smallcase manager and principal partner at financial consultancy Craving Alpha, Mayank Mehraa, stated.
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Furthermore, VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, believes that FPIs would be cautious in the coming months since short-term values in the nation are high.
FPIs invested a net of Rs 47,148 crore in Indian shares in June, according to the statistics.
This followed a net investment in shares of Rs 43,838 crore in May, Rs 11,631 crore in April, and Rs 7,936 crore in March, according to depositories data.
Previously, FPIs withdrew nearly Rs 34,000 crore from stocks in January and February.
FPI investment reached its highest level in 10 months in June. Prior to this, they had invested a net sum of Rs 51,204 crore in shares in August 2022, according to the statistics.
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FPIs were optimistic about Indian markets, owing to positive local macroeconomic data, intensive monsoon activity, and a bleak global economic outlook, according to Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities.
Geojit’s Vijayakumar said that sustained FPI flows triggered by India’s steadily improving macros have taken markets to record highs. The major reason for the sustained FPI flows into India is the reversal in FPI strategy to “Buy India, Sell China”.
Earlier in January and February, foreign investors were pulling out from Indian equities, and they were hugely investing in China as it opened up after Covid and expectations of a revival in growth and earnings.
Himanshu Srivastava, Associate Director, Manager Research at Morningstar India, said that sentiments have been boosted after the US Federal Reserve pressed the pause button on its rate hike cycle, triggering flows into emerging markets like India. This indicates that FPIs are expecting better growth from the Indian markets.
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Another factor that has aided flows into Indian shores is the concern over China’s economic recovery. There has also been an uncertain environment in the US and UK, he added.
In terms of sectors, FPIs continued to invest in financials, automobiles, capital goods and construction-related stocks.
Apart from equities, FPIs invested around Rs 9,200 crore in the debt market in June.
So far in 2023, foreign investors have put in Rs 76,406 crore in the Indian equities and Rs 16,722 crore in the debt markets.
