Building on the buying momentum gathered last month, foreign portfolio investors (FPIs) intensified their investment into Indian equity market this month, pumping in over Rs 49,000 crore so far tracking strong corporate earnings data and on hopes that macro fundamentals will improve from here onwards.
FPIs had invested Rs 5,000 crore in Indian share market in July after consistently selling for nine consecutive months. Between October 2021 and June 2022, they sold a massive Rs 2.46 lakh crore in the India equity markets.
In the coming months, FPI flows will largely depend on commodity prices and geopolitical concerns, corporate results and signs from the US Fed on interest rates movements, Vivek Banka, founding member of fintech platform GoalTeller, said.
The ultra-hawkish stance of the US Fed chairman Jerome Powell at Jackson Hole is a short-term negative for equity markets. This might impact FPI flows in the short-term, V K Vijayakumar, Cheif Investment Strategist at Geojit Financial Services, said.
According to data with depositories, FPIs pumped a net amount of Rs 49,254 crore in Indian equities during August 1-26. This is the highest investment made by them so far in the current year.
Stronger corporate earnings in spite of higher crude oil prices and fears of global recession are the primary reasons for fund infusion by FPIs, Jay Prakash Gupta, founder of Dhan, said. Shrikant Chouhan, Head – Equity Research (Retail), Kotak Securities, also attributed the inflow to improvement in corporate earnings macro fundamentals.
Foreign investors continued to buy equities in August inspite of rise in US bond yields and rising dollar. The fact that FPIs are buying in India even amidst strengthening dollar is a reflection of their vote of confidence in the Indian economy, Vijayakumar said. US inflation slowed down from a 40-year high in June to 8.5 per cent in July on lower gasoline prices.
