In a revival sign, foreign investors have bought equities worth close to Rs 44,500 crore so far in August as June quarter corporate earnings and positive global cues instilled some confidence in market participants towards Indian capital market.
According to data with depositories, FPIs pumped in a net amount of Rs 44,481 crore in Indian equities during August 1-19. This is the highest investment made by them so far in the current year.
Bucking the nine-month long trend, foreign portfolio investors (FPIs) had bought Indian equities worth nearly Rs 5,000 crore in July 2022, data with depositories showed.
Before July, FPIs had been on a selling spree since October last year. Between October 2021 till June 2022, they sold a massive Rs 2.46 lakh crore in the Indian equity markets. In the coming months, FPI flows are to remain volatile.
However, with the fading concerns of rising inflation, tightening of monetary policy and performance of first quarter earnings, inflows are likely to improve in emerging markets, said Shrikant Chouhan, Head – Equity Research (Retail), Kotak Securities. In the coming months, FPI flows are to remain volatile.
The near-term trend in capital flows will be influenced mainly by the movement of the dollar, V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.
Sentiments in the equity market have turned bullish due to the sustained buying by FPIs. “The main trigger for the sustained buying has been the steady fall in the dollar index from above 109 in end July to around 105 recently. But on August 19 the dollar index has again moved up and crossed 107. If this trend continues capital inflows might be impacted,” Vijayakumar added.
Kotak Securities’ Chouhan attributed the positive inflow to mounting hopes that the global economy may avoid a major downturn amid softening inflation levels in the US. US inflation slowed down from a 40-year high in June to 8.5 per cent in July on lower gasoline prices, indicating that the US Federal Reserve might be less aggressive in hiking interest rates.
