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After two months of net outflow, foreign investors turned buyers in June, infusing Rs 26,565 crore in Indian equities, driven by political stability and a sharp rebound in markets.
Looking ahead, attention will gradually shift towards the budget and Q1 FY25 earnings, which could determine the sustainability of FPI flows, Vipul Bhowar, Director, Listed Investments, Waterfield Advisors, said.
According to the data with the depositories, foreign portfolio investors (FPIs) have made a net infusion of Rs 26,565 crore in equities this month.
This came following a net outflow of Rs 25,586 crore in May on poll jitters and over Rs 8,700 crore in April on concerns over a tweak in India’s tax treaty with Mauritius and a sustained rise in US bond yields.
Before that, FPIs made a net investment of Rs 35,098 crore in March and Rs 1,539 crore in February, while they took out Rs 25,743 crore in January.
The net outflow now stood at Rs 3,200 crore in the month, data with the depositories showed.
Geojit Financial Services Chief Investment Strategist V K Vijayakumar said political stability, despite the BJP not getting a majority on its own, and the sharp rebound in markets aided by steady domestic institutional investors (DIIs) buying and aggressive retail buying, has forced the FPIs to turn buyers in India.
However, the FPI buying has been focused on a few specific stocks rather than being widespread across the market or sectors.
This is because Indian equities are still considered overvalued by FPIs, Waterfield Advisors’ Bhowar said.
They are favouring the financial, auto, capital goods, real estate, and select consumer sectors.
“With government stability assured, impressive GDP performance and forecasts, stable consumer price index, ample forex reserves, and robust banking sector health, I anticipate a steady and substantial FPI inflow,” Kislay Upadhyay, smallcase manager & founder Fidelfolio, said.
Additionally, FPIs invested Rs 14,955 crore in the debt market in June.
With this, FPIs’ investment in the debt market reached Rs 68,624 crore in 2024 so far.
India’s inclusion in the JP Morgan Bond Index is positive.
In the long term, this will reduce the cost of borrowing for the government and the cost of capital for corporates.
This is positive for the economy and therefore, for the equity and debt market.
