FPIs Invest INR 1,210 Crore in Indian Markets in First 5 Trading Sessions of Aug

On the back of domestic fundamentals, overseas investors were net purchasers in Indian markets worth Rs. 1,210 crore (US$ 163.05 million) in the first five trading sessions of August. According to depositories data, they invested Rs. 975 crore (US$ 131.36 million) in shares between August 2 and 6.

Foreign portfolio investors (FPIs) invested Rs. 235 crore (US$ 31.66 million) in the debt market.

The entire net investment for the period under consideration was Rs. 1,210 crore (US$ 163.05 million).

FPIs were net sellers of Rs. 7,273 crore (US$ 979.89 million) in July.

“Even as concerns about the third wave lingered in global markets, markets were buoyed by a set of domestic indicators such as recovery in PMI prints, lower unemployment rate in CMIE surveys, and recovery in GST receipts,” said Mr. Shrikant Chouhan, executive vice president, equity technical research at Kotak Securities.

However, Morningstar India’s assistant director of research, Mr. Himanshu Srivastava, pointed out that this does not yet signal a shift in trend.

“Higher valuations, a jump in oil prices, and a firmer US dollar have kept foreign institutional investors (FIIs) away from Indian shares, and they have been booking profits at regular intervals with markets near all-time highs,” he added.

“The return of foreign institutional investors (FIIs) has sparked renewed interest in large-cap stocks,” said Mr. VK Vijayakumar, chief investment strategist at Geojit Financial Services.

According to Mr. Chouhan, the MSCI Emerging Markets Index gained 1.51% this week.

Except for Thailand, all major emerging markets and Asian markets have witnessed FPI inflows this month.

Month-to-date, FPI inflows to Taiwan, South Korea, Indonesia, and the Philippines were US$ 2,588 million, US$ 1,722 million, US$ 93 million, and US$ 8 million, respectively.

Thailand, on the other hand, has seen FPI outflows of US$ 182 million so far this month, according to him.

In terms of the future of FPI flows, Mr. Srivastava believes India will continue to be a desirable investment location in the long run. FPI flows are projected to rebound as the macroeconomic climate improves and the domestic economy begins to recover.

Foreign investors, on the other hand, may be put off by the possibility of a third wave.

Interim profit booking cannot be ruled out due to high valuations, and currency volatility would continue to impair foreign flows into Indian equities, according to Mr. Srivastava.

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