FPIs’ Buying Spree in Indian Equities Continues; Invest Rs 45,365 Crore in July

• ByStartupStory     |    July 30, 2023

Foreign portfolio investors (FPIs) have sustained their buying momentum in the Indian equity markets in July, making a net infusion of Rs 45,365 crore. This influx is attributed to the country’s stable macroeconomic fundamentals and steady earnings growth, drawing overseas investors to the Indian market.

Despite the overall positive trend, there was a slight slowdown in FPIs’ buying activity during the two trading days leading up to the US Federal Reserve meeting on July 26. The possibility of future rate hikes and the Fed’s exclusion of rate cuts for the near term influenced foreign investors to reevaluate their investment decisions, according to Himanshu Srivastava, Associate Director – Manager Research at Morningstar India.

Data reveals that FPIs have been consistently increasing their exposure to Indian equities since March, pouring in Rs 45,365 crore in July alone. This figure encompasses investments through bulk deals, primary markets, and stock exchanges. Notably, this is the third consecutive month in which net flows have exceeded the Rs 40,000 crore mark. In June and May, FPIs infused Rs 47,148 crore and Rs 43,838 crore, respectively. Over the last three months (May to July), FPIs have invested a total of Rs 1.36 lakh crore in Indian equity markets. Before March, FPIs had collectively withdrawn Rs 34,626 crore in January and February.

VK Vijayakumar, Chief of Investment Strategy at Geojit Financial Services, emphasized that FPIs’ investment decisions are influenced not only by domestic fundamentals but also external factors such as the dollar index, US bond yields, and global market trends. This explains why FPIs have been buying financial stocks that they previously sold in the initial three months of 2023.

Despite the uncertainties in the global financial landscape, the Indian economy’s stability remains a positive factor, making India an attractive investment destination for FPIs, as noted by Morningstar India’s Himanshu Srivastava.

In addition to equities, overseas investors have also injected Rs 3,340 crore into the Indian debt market during the review period. This brings the inflow in the equity market to Rs 1.22 lakh crore and Rs 20,000 crore in debt so far this year, based on data from the depositories.

Among the sectors attracting the majority of FPI investments are financials, automobiles, capital goods, real estate, and FMCG.

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