FPIs invest ₹16,621cr in Indian equities in August
What's the story
Foreign portfolio investors (FPIs) have invested ₹16,621 crore in Indian equities during the first half of August. The investment comes on the heels of a ₹20,200 crore inflow in July. This marks a significant turnaround from four months of heavy selling by FPIs. In March alone, they had pulled out a whopping ₹1.17 lakh crore from Indian equities.
Market dynamics
FPIs still net sellers this year
Despite the recent surge in investments, FPIs have been net sellers in Indian equities this year.
They have withdrawn some ₹2.4 lakh crore so far, exceeding last year's total outflow of ₹1.66 lakh crore.
Manish Bhandari, CEO and Portfolio Manager at Vallum Capital, attributed the recent reversal to improving relative valuations, resilient corporate earnings, expectations of softer US rates, and lower currency volatility among other factors.
Investment trends
Selective investments and sectoral shifts
Vedant Gupte, Co-Founder and CEO of investment platform Trackk, noted that August's inflows indicate the earlier selling was more due to global macro factors than India-specific concerns.
He also observed that FPIs are becoming more selective in their investments, with a growing interest in sectors linked to domestic consumption.
This trend was reflected in July's sectoral data, which showed strong buying in Consumer Services, Healthcare, among others, despite net selling across other sectors.
Market expansion
Interest in India's debt market
FPIs have also extended their interest to India's debt market.
They invested ₹972 crore in debt through the Fully Accessible Route (FAR) and another ₹69 crore through the general route during the period under review.
The sustainability of this foreign buying trend will depend on global macroeconomic conditions such as US Treasury yields, dollar index, crude oil prices, and corporate earnings upgrades.