Foreign Portfolio Investors (FPIs) injected ₹30,772 crore into Indian equities so far this month, driven by hopes of continued policy reforms, sustained economic growth and a better-than-expected earnings season.
“Additionally, the anticipation of a reform-oriented Budget has also lifted investor sentiment,” Himanshu Srivastava, Associate Director - Manager of Research at Morningstar Investment Research India, said.
“Going forward, if the recent trend of weakness in dollar and bond yields persists, FPIs are likely to continue their buying in the market,” V.K. Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said.
“Domestic and foreign investors are keenly watching for possible tweaks in the long-term capital gains tax in the Budget to be presented on July 23,” he added.
According to the data with the depositories, FPIs have made a net inflow of ₹30,772 crore in equities this month (till July 19).
This came following an inflow of ₹26,565 crore in equities in the entire month of June, driven by political stability and the sharp rebound in markets.
Before that, FPIs withdrew ₹25,586 crore in May on poll jitters and more than ₹8,700 crore in April on concerns over a tweak in India’s tax treaty with Mauritius and a sustained rise in the U.S. bond yields.
“The formation of the NDA government at the Centre for the third consecutive term has had a positive impact on investor sentiments. It has raised expectations for continued policy reforms and sustained economic growth,” Mr. Srivastava said.
“Additionally, the better-than-expected earnings season so far has also worked towards building investor confidence,” he added.
Apart from equities, FPIs invested ₹13,573 crore in the debt market during the period under review. This has pushed the debt tally to ₹82,197 crore this year so far.
During the fortnight that ended July 15, FPIs were buyers in autos, capital goods, healthcare, IT, telecom and oil and gas. “A notable trend was the lack of buying in financial services, which partly explains the poor performance of financial services in July so far,” Mr. Vijayakumar said.
Flows to date in July 2024 were mixed for emerging markets. In addition to India, Brazil, Indonesia, Malaysia, the Philippines, and South Korea witnessed inflows. On the other hand, Taiwan, Thailand and Vietnam witnessed outflows.
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