Foreign portfolio investors (FPI) have pumped in a net ₹7,245 crore into the Indian capital markets in August so far amid positive sentiments due to an improving macroeconomic environment.

The gradual increase in net inflows indicates that investors are slowly dropping their cautious stance and gaining higher conviction on the Indian markets, said Himanshu Srivastava, associate director - manager research, Morningstar India.

As per depositories data, ₹5,001 crore was invested in equities and ₹2,244 crore in the debt segment by overseas investors between August 2-20. This took the total net investment to ₹7,245 crore.

Regarding other emerging markets, Shrikant Chouhan, executive vice president, equity technical research at Kotak Securities, noted that flows in South Korea, Taiwan and Thailand continue to be negative to the tune of USD 5,269 million, USD 855 million and USD 341 million, respectively.

On the other hand, Indonesia reported FPI inflows of USD 156 million.

As per Srivastava, the Indian equity markets offer an attractive investment proposition from the long-term perspective. With an improving macroeconomic environment and positive outlook, FPIs are focusing their attention on Indian equities.

However, he added that short-term risks continue to persist.

Additionally, lower chances of further rate cuts on the back of global inflation continue to add to their worries.

"With the latest Fed minutes indicating the possibility of tapering by year-end, markets have turned a bit volatile. With the Dollar index at around 93.57, FPIs are likely to be on a wait & watch mode, going forward," said V K Vijayakumar, chief investment strategist at Geojit Financial Services.

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