FPIs extend buying streak in Indian equities, infuse ₹21,944 cr in July so far

The inflow was broad-based, with inflow seen across all sectors. The biggest sectoral inflows were from the Capital Goods ( ₹3,32,484 crores), Capital Goods ( ₹1,81,554 crores), and Chemicals ( ₹1,01,059 crores) sectors, as of 30th June 2023.

The rising interest rates in the US, which have made Indian equities less attractive to foreign investors is one of the of factors that could be contributing to the recent sell-off in FPI flows.

Despite the recent sell-off, FPI flows remain positive for the year, with net inflows of ₹101,416 crores ($12,183 million). 

The stocks FPI were interested mainly in buying were BSE-S0003096″ data-name=”Escorts Kubota”>Escorts Kubota, Gujarat Fluoroch, Timken India, RHI Magnesita, and Data Pattern and more.

V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services commented,” FPI flows into India are continuing unabated. The decline in the dollar index to below 100 on Friday, the lowest level in one year, is favourable to emerging markets. India is the largest recipient of FPI flows YTD among emerging markets. The selling in China continues and FPIs were sellers in EMs like Thailand and Vietnam also recently.”

In July, through 14th, FPIs have invested ₹30660 crores in India. This figure includes investment through bulk deals and primary market, too, apart from investment through stock exchanges. (Source: NSDL)

FPIs continue to invest in financials, automobiles, capital goods, realty and FMCG. FPI buying in these sectors have contributed hugely to the surge in prices of stocks in these sectors and the Sensex and Nifty scaling record highs.

Declining dollars is a powerful trigger that can sustain the FPI inflows. The concern, however, is the rising valuations which are getting stretched. The valuations in China (PE is 9) is hugely attractive now compared to valuations in India (PE is around 20) and, therefore, the ‘Sell China, Buy India’ policy of FPIs cannot continue for long.

Positive global cues helped the domestic market indices conclude with strong gains on Friday, with the Nifty breaching the 19,550 barrier. Global equities markets are being supported by the downward trend in US inflation and the durability of the US economy. 

Furthermore, the continuing decrease in the dollar, which has reached its lowest level since April 2022, is favourable for emerging markets such as India, resulting in ongoing FPI flows. Despite record high index values, the India VIX shows no signs of market anxiety. The S&P BSE Sensex rose 502.01 points, or 0.77%, to 66,060.90. The Nifty 50 rose 150.75 points, or 0.78%, to 19,564.50. Both indices reached all-time closing highs.

Updated: 15 Jul 2023, 06:32 PM IST