Foreign Portfolio Investors (FPIs) have infused close to ₹8,400 crore in Indian equities so far this month primarily due to uncertainty in the global markets, economic concerns in China, and stability of the domestic economy.
With the global economic mood getting challenging due to slackening Chinese demand, any weakness in global equities could trigger wild gyrations in local shares and result in FPIs’ flow turning choppy going ahead, Srikant Chouhan, Head of Equity Research (Retail) at Kotak Securities, said.
According to data with the depositories, FPIs put in a net sum of ₹8,394 crore in the Indian equities from August 1-18.
However, in the first week of August, FPIs took a breather and pulled out over ₹2,000 crore from equities on the back of Fitch downgrading the credit rating for the US.
“The uncertainty in the global markets and economic concerns in China again played a role in FPIs shifting their focus back toward Indian markets, which have been more resilient and stable,” Himanshu Srivastava, Associate Director - Manager Research, Morningstar India, said. “Also, better-than-expected earnings for the June quarter lent positive support to the sentiments,” he added.
“The last few weeks have been rare in Indian capital market history where both domestic and FPIs have bought into the Indian markets,” Abhishek Banerjee, Founder and CEO, of Lotusdew Wealth & Investment Advisors, said.
Before August, Indian equities witnessed an unabated net inflow for the past five months from March to July on the resilience of the Indian economy against the backdrop of an uncertain global macro.
Moreover, FPIs invested over ₹40,000 crore each in the last three months (May, June, and July).
The net inflow was ₹46,618 crore in July, ₹47,148 crore in June, and ₹43,838 crore in May. Before March, overseas investors pulled out ₹34,626 crore collectively in January and February.
Apart from equities, FPIs invested ₹4,646 crore in the debt market during the period under review.
With this, inflow in the equity market reached ₹1.31 lakh crore, while the same for debt was at over ₹25,000 crore so far this year, data with the depositories showed.
“In terms of sectors, FPIs showed interest in financial services, energy like oil and gas, and IT services,” Lotusdew’s Banerjee said.