Foreign portfolio investments (FPIs) in Indian equity markets continue to rise, with foreign investors injecting Rs 43,800 crore in July so far. This can be attributed to stable macroeconomic fundamentals, consistent earnings growth, and the challenges faced by the Chinese economy.
According to data from the depositories, the total inflow into the equity market this year has reached Rs 1.2 lakh crore. Market analysts predict that the outlook for FPI inflows into Indian equities remains positive and widespread.
However, there are concerns about the increasing valuations. V K Vijayakumar, Chief Investment Strategy at Geojit Financial Services, warns that sharp corrections may occur due to negative triggers at such high valuations.
The continuous inflows from FPIs have propelled Indian equity markets to record-high levels. Himanshu Srivastava, Associate Director – Manager Research at Morningstar India, suggests that intermittent profit booking cannot be ruled out in the future.
March onwards, FPIs have been consistently buying Indian equities, investing Rs 43,804 crore in July alone (as of July 21). This marks the third consecutive month where net flows have exceeded Rs 40,000 crore, with June seeing Rs 47,148 crore and May seeing Rs 43,838 crore.
These figures include investments through bulk deals, primary markets, and stock exchanges.
Prior to March, overseas investors collectively withdrew Rs 34,626 crore in January and February.
“The foreign flows into Indian equities are driven by steady earnings growth recovery, stable macroeconomic fundamentals, the challenges faced by the Chinese economy, and concerns over its recovery,” explains Srivastava.
In the midst of a globally uncertain economic landscape, India’s strong micro economy, attractive valuations, and promising corporate earnings indicate the potential for sustained growth and investment opportunities, as noted by Mayank Mehraa, Smallcase manager and principal partner at financial consultancy Craving Alpha.
Among emerging markets, India has received the highest FPI flows year-to-date, according to Geojit’s Vijayakumar.
In addition to equities, foreign investors have also injected Rs 2,623 crore into the Indian debt market during this period. Financials, automobiles, capital goods, realty, and FMCG sectors continue to attract FPI investments.
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Omprakash Tiwary is a business writer who delves into the intricacies of the corporate world. With a focus on finance and economic landscape. He offers readers valuable insights into market trends, entrepreneurship, and economic developments.
