Mumbai (Maharashtra) [India], June 7 : Foreign Portfolio Investors (FPIs) began the first week of June on a weak note in the Indian stock market, with net investments staying in the negative territory.
According to data released by NSDL, FPIs pulled out a total of Rs 8,749 crore from Indian equities during the week from June 2 to June 6. This indicates that foreign investors were net sellers in the market during most of the week.
The withdrawal came amid global uncertainties and cautious investor sentiment. However, a sharp turnaround was seen on Friday after the Reserve Bank of India's Monetary Policy Committee (MPC) announced a surprise rate cut of 50 basis points. The repo rate was reduced to 5.5 per cent, which gave a strong push to investor confidence.
Market experts believe that this aggressive rate cut will boost India's economic momentum and improve overall demand conditions. With inflation staying within the RBI's comfort zone and the central bank indicating a pro-growth stance, FPIs are expected to increase their investments in the coming months.
Ajay Bagga Banking and Market expert told"June first week saw roller coaster in terms of FPI flows. The trend is positive as a weak US dollar is inversely correlated to EM flows. With Indian macro showing strength and expectations of the 100 bps rate cuts providing a further boost to economic momentum and aggregate demand, FPIs will rank India as a top investment destination. Valuations are quoted as a constraint but we see the growth potential overriding these concerns eventually".
Although high stock market valuations remain a concern, experts say that India's strong growth prospects may help overcome this challenge.
The net foreign portfolio investment (FPI) inflows in May remained in positive and stood at Rs 19,860 crore, making May the best-performing month so far this year in terms of foreign investment.
In previous months' data also showed that FPIs had sold stocks worth Rs 3,973 crore in March. In January and February, they had sold equities worth Rs 78,027 crore and Rs 34,574 crore, respectively.
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