FPI inflows are concentrated in a few specific stocks rather than being spread across markets and sectors.
Foreign investors made a strong comeback after the elections, with equity investments hitting Rs 12,170 crore in June. Image: Canva
Following the results of the general election, the party made a strong comeback. Foreign Investors Indian equities have seen inflows of Rs 12,170 crore so far in June, mainly on hopes of continued policy reforms and sustained economic growth.
This follows a net withdrawal of Rs 25,586 crore from equities in May due to election jitters and over Rs 8,700 crore withdrawn from equities in April due to concerns over amendments to the India-Mauritius tax treaty and a sustained rally in US stocks. Bond Yields.
With this investment, total outflows so far in 2024 (till June 21) have reached Rs 11,194 crore, according to vault data.
Going forward, MojoPMS Chief Investment Officer Sunil Damania said foreign portfolio investors (FPIWith the Indian equity market currently trading at a high, FPI inflows are likely to remain subdued. FPIs have been on the sidelines watching the election results. So far in 2024, except for March (where inflows of Rs 35,000 crore occurred), they have been withdrawing from India.
“While the election results were unexpected and approval ratings were lower than expected, markets welcomed the return of a stable government and continuity in power,” said Kisrey Upadhyay, small case manager and founder of Fidelfolio.
Moreover, business sentiment remained positive and policy continuity also boosted market confidence. Damania cited three main reasons for the positive inflows. “First, government continuity ensures that reforms will continue. Second, the Chinese economy is slowing, as evidenced by the 12 percent fall in copper prices over the past month. Third, certain block trades in the market are being actively underwritten by FPIs,” Damania said.
However, these FPI inflows are concentrated in a few specific stocks rather than being spread across markets and sectors.
Moreover, expectations of a growth-oriented budget are also boosting investor sentiment, said Himanshu Srivastava, associate director, research, Morningstar Investment Research India Ltd. Initial trends in FPI activity in June indicate buying in financial services, telecom and real estate, and selling in FMCG, IT, metals and oil & gas, said VK Vijayakumar, chief investment strategist at Geojit Financial Services.
Further, depository institution data showed that FPIs invested Rs 10,575 crore in the bond market during the period under review. Foreign investors have been investing in Indian bonds consistently in 2024, except in April, with total investments standing at Rs 6,424.4 crore. India’s inclusion in the debt index will have a positive impact on debt inflows.
“Despite any short-term shifts in capital flows, we believe India will continue to remain an attractive long-term destination for global investors,” said Nimesh Chandan, chief investment officer at Bajaj Finserv Asset Management.
