Foreign portfolio investors turned major buyers in both primary and secondary markets in May, pumping in ₹43,838 crore last month.
India has attracted the largest investment among emerging markets with FPIs turning net sellers in China last month.
The bullishness of FPIs in Indian equities was buttressed by the better-than-expected GDP number of 6.1 per cent in the March quarter against the market consensus of 5 per cent. The GDP growth of 7.2 per cent for FY23 also beat the street estimate of 7 per cent.
Further, the Indian market bellwether Sensex gained 1,510 points to 62,622 points in May while the Nifty rallied to 5.5 month high of 18,662 points after soaring to record 18,887 points.
Domestic institutional investors (DIIs) made most of the market rally and turned net sellers to the tune of ₹3,306 crore in May. This was a first since last November. DIIs were big buyers in January and February when FPIs were net sellers.
VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services said a survey among foreign portfolio investors showed that India is now the consensus overweight among all emerging markets.
FPIs may continue their investment in India in this month too since the latest GDP data and high frequency indicators reflect a robust economy gaining further strength, he added.
Financials, automobiles, telecom and construction are attracting big investments.
However, after the sharp rally there may be some selling pressure as investors try to book profit on higher valuations, he added. The recovery in overall automobile sales will again put markets on the fast track.
GST collection increased 12 per cent in May to ₹1.57-lakh crore on the back of robust demand across sectors.
The approval of a debt deal that prevented a US default instilled optimism among global investors, who are now eagerly awaiting the Federal Reserve’s forthcoming monetary plan.
The increased US debt ceiling also calmed the turbulence in the global market and the overall tone looks positive
Mitul Shah, Head of Research, Reliance Securities said with corporate results season almost coming to an end, the focus will now shift to the RBI monetary policy due next week and progress of monsoon which is expected to arrive in Kerala over the weekend.