Ahead of Budget on July 23, Foreign Portfolio Investors (FPIs) continued to be on an equity buying binge this past week, pumping nearly ₹ 11,000 crore in just four trading sessions. Total FPI net investments this month through July 19 stood at ₹30,771 crore, depositories data showed.
Reflecting the increased FPI appetite for Indian equities, the latest July flows is in fact higher than the entire June’s net flows of ₹26,565 crore.
FPIs approach to Indian equities have undergone a massive change since the election verdict of June 4, when the equity markets crashed after it was realized that BJP will not get the majority.
However, markets started recovering once it came known that NDA (BJP with support of allies) will form the government. Since the outcome of elections, FPIs have invested about $6 billion in equities.
Commenting on the latest FPI flows, VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, said that FPIs were consistent buyers in July so far with buying picking up during the week ended July 19.
During the fortnight ended July 15, FPIs were buyers in autos, capital goods, healthcare, IT, telecom and oil and gas. A notable trend was the lack of buying in financial services, which partly explains the poor performance of financial services in July so far, Vijayakumar added.
“If the recent trend of weakness in dollar and bond yields persists, FPIs are likely to continue their buying in the market. Domestic and foreign investors are keenly watching for possible tweaks in the long term capital gains tax in the Budget to be presented on July 23,” Vijayakumar said.
The continued buying interest of FPIs indicated that they may have shrugged off earlier concerns over policy reforms continuity in the wake of the 2024 general elections, economy watchers said.
Including the net inflows upto July 19, the total FPI net inflows this calendar year stood at ₹33,973 crore. In the first half this calendar year, FPIs had net invested just ₹3,201 crore.
In calendar year 2023, FPIs had net invested $21.4 billion in Indian equities.
Foreign brokerage Jefferies had, in a recent research note, said that it expects FPI flows into India to improve in second half of this calendar year as clarity on government policies emerge postBudget on July 23.
DEBT MARKETS
Meanwhile, FPIs have pumped ₹13,537 crore in debt markets this month through July 19. This comes on the heels of India’s bond inclusion in JP Morgan global bond indices starting June 28.
This July infusion has taken their net investments in debt markets this calendar year to ₹82,198 crore.
Except for April 2024, all the months of this calendar year have seen net inflows into Indian debt markets.