Foreign Portfolio Investors (FPIs) continued their buying stance and pumped in close to Rs 9,800 crore in Indian equities this month so far, on strong economic growth and attractive valuations of stocks.
This came following a nine-month high investment of Rs 43,838 crore in equities in May, Rs 11,631 crore in April, and Rs 7,936 crore in March, data with the depositories showed.
Before that, FPIs had pulled out over Rs 34,000 crore during the January-February period.
Further, the outlook for FPI flows in the rest of June is positive as the Reserve Bank of India (RBI) has signaled that it will not be raising interest rates shortly, which is a positive sign for equity markets, Mayank Mehraa, Smallcase manager and principal partner at financial consultancy Craving Alpha, said.
However, valuation could become a concern as Indian markets continue to surge and stricter regulatory norms could also check foreign money flowing into India to some extent, Himanshu Srivastava, Associate Director – Manager Research, Morningstar India, said.
According to the data, FPIs invested a net sum of Rs 9,788 crore in Indian equities during June 1-9.
The inflow could be attributed to too strong economic growth, relatively attractive valuations of Indian stocks compared to other large emerging markets, and confidence about the positive policy outlook from the government, Mehraa said.
Morningstar India’s Srivastava said the agreement on the US debt ceiling reaching its conclusion has had a positive impact on the Indian markets as well as overall investor sentiments.
In addition, foreign investors have been focussing on Indian equities for a while now given the resilience it has shown amid uncertain times and since India is better placed as an economy compared with other similar markets, he added.
In terms of sectors, foreign investors may continue buying in financials and autos since the prospects of these sectors look promising.
Apart from equities, FPIs invested Rs 592 crore in the debt market during the period under review due to the attractive yields offered by Indian debt securities.
So far in 2023, foreign investors have put in Rs 39,000 crore in Indian equities and Rs 8,100 crore in debt markets.
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