New Delhi [India], August 4 : The buying spree in Indian stock markets by foreign portfolio investors (FPIs) continued into the second month. The net foreign investments into the Indian stock market stood at Rs 32,365 crore, data made available by National Securities Depository Limited showed.
In June, they bought stocks in India worth Rs 26,565 crore on a cumulative.
Foreign buyers investing in Indian stocks, at a time when both domestic institutional and retail investors, led indices Sensex and Nifty to touch fresh record highs now and then. This week, Nifty for the first time touched the milestone of 25,000 mark. The index has gained approximately 11 per cent over the past three months, driven by robust GDP growth, controlled inflation, strong domestic liquidity, and favorable monsoon conditions.
FPI activity in June and July was influenced by the election results, as the formation of the new government happened smoothly.
As per definition, Foreign Portfolio Investment (FPI) involves an investor buying foreign financial assets.
In the two months preceding June and July, the foreign portfolio investors were net sellers in India, data showed. Interestingly, at a time when overseas investors were net sellers in Indian equities, domestic institutional investors stayed net buyers, largely making up for the outflows by foreign investors.
"...FPI inflows into emerging markets like India FPIs may think of pulling more money out of India since India is the most expensive emerging market now. The developments in the US economy and markets in the coming days will set the trend for FPI in August," said VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services.
Vipul Bhowar, Director of Listed Investments, Waterfield Advisors, said, FPIs may opt to prioritise sectors that stand to benefit from domestic reforms and growth, such as technology and infrastructure, while approaching sectors vulnerable to global economic downturns with prudence.
Milind Muchhala, Executive Director, Julius Baer India, said, "We have been seeing mixed activity by the FPIs in the recent past, with bouts of buying and selling, a trend which is likely to continue for some more time. Their activity will remain influenced by various factors, including the performance of the global equity markets, the movement of dollar index, incremental geopolitical events, and opportunities in the Indian markets considering slightly elevated valuation levels."
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