FPIs invest almost ₹30,920cr in Indian equities this August
What's the story
Foreign portfolio investors (FPIs) have pumped ₹30,919 crore into Indian equities in August. The investment marks the second consecutive month of buying by FPIs. The inflow comes after a ₹20,200 crore investment in July and is a major turnaround from four months of heavy selling earlier this year. The positive trend is attributed to improving corporate earnings and a stable rupee amid easing geopolitical concerns.
Investment reversal
FPIs were net sellers this year
Before the two-month buying spree, FPIs had been on a selling streak for four months. In June alone, they withdrew ₹49,340 crore from Indian equities.
The trend has changed drastically since then, with the recent investments marking a possible reversal in their investment strategy.
However, it's worth noting that foreign investors have remained net sellers in Indian equities this year, with withdrawals totaling ₹2.23 lakh crore so far.
Market drivers
Factors driving FPI inflows
V K Vijayakumar, Chief Investment Strategist at Geojit Investments, attributed the recent FPI inflows into India to a reversal in chip trade, rupee stability and improving earnings growth.
The continuation of foreign buying in August was supported by improving domestic fundamentals as well as a relatively favorable global backdrop.
"Corporate earnings showed signs of improvement during the June quarter," said Himanshu Srivastava, Principal, Manager Research, Morningstar Investment Research India.
Investor outlook
Global factors and geopolitical concerns
Global factors turned relatively supportive during parts of the month, with easing geopolitical concerns aiding risk sentiment.
Expectations of softer US interest rates and a rotation of global capital away from crowded AI and semiconductor trade markets like Korea and Taiwan, created room for incremental allocations toward India.
However, tensions in West Asia and uncertainty over crude oil prices continue to loom large.