Foreign portfolio investors (FPIs) stayed net buyers in July, with flows in equities exceeding that in debt for the second time this year.
Investors net bought shares worth ₹15,352 crore till July 12, taking the net inflows to nearly ₹42,000 crore, NSDL data showed. In the year to date, net purchases stood at ₹18,553 crore, with selling in the months of January, April and May.
In debt, the net purchases totalled ₹4,196 crore this month, adding to the ₹13,982 crore net purchases last month. In the year to date, net purchases stood at ₹82,082 crore, 4.4 times the inflows in equities.
India has a 1 per cent weight in the JPMorgan EM Bond index, which will rise to 10 per cent over a 10-month period.
Manoj Purohit, Partner and Leader - FS Tax, Tax and Regulatory Services, BDO India, said: “The net FPI inflows have turned green this month, both in the equity and debt segment. Lot of traction is being seen primarily in the debt segment by European countries, especially Luxembourg which surpassed Mauritius to become one of the desired jurisdictions for injecting funds via the FPI route. Ireland too follows suit in light of its conducive local fund regime and tax-efficient structures for the debt segment.”
The reason for a quick rebound in the capital markets can be attributed to the positive sentiments, stable government’s assurance on continuity of reforms, tepid US Fed rates and a strong domestic demand, said Purohit. The recent announcements in IFSC Gift City for wide participation by foreign and Indian investors have also diverted international players to allocate a substantial portion of their global portfolio to Indian markets, he said.
“FPI flows will continue to be erratic influenced by global factors. Better-than-expected results from IT majors who have come out with results so far indicate potential for FII buying in these stocks where valuations are not excessive,” said V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
The Union Budget to be tabled on July 23 which will provide cues for the market going forward. “As India enters Amritkaal, the FPI community will play a major role for the nation to position itself as the third largest economy in the world,” said Purohit.