Mumbai, Sep 15 Domestic institutional investors (DIIs) provided a counterbalance to the FPI selling in August, marking their 25th consecutive month of net inflows with purchases of Rs 94,829 crore ($10.8 billion) — the highest in the last 10 months, a report showed on Monday.
FPIs, on the other hand, were net sellers of Indian equities, with net outflows of $4 billion in August, the highest in the last seven months, according to the ‘Market Pulse’ report by the National Stock Exchange of India (NSE).
The Indian equity market continued its sell-off in August due to the imposition of aggressive US tariffs and a subsequent sell-off by FPIs.
“The fiscal deficit is undergoing consolidation, and monthly GST collections remain robust. The share of capital expenditure is also on the rise, indicating a focus on long-term growth,” the report noted.
Inflation is at an over eight-year low , falling below the Reserve Bank of India's (RBI) target. The RBI is expected to remain data-dependent on future rate decisions.
While corporate profitability saw a recovery in the first quarter of the fiscal year, consensus earnings estimates have faced downgrades, although the pace has moderated.
The energy sector was an exception, experiencing upgrades that almost entirely offset the downward revisions in other sectors like Consumer Discretionary, Materials, and Financials, the report said.
Listed companies, despite being fewer in number than unlisted ones, contribute a disproportionately large share to corporate tax revenues, and this contribution has broadly tracked GDP growth.
New equity listings picked up in August, but debt fundraising slowed to a 16-month low. New investor registrations tapered off even as the total registered investor base approached the 12-crore milestone, the report mentioned.
Trading activity in the derivatives market was selective last month. While interest rate futures saw a significant jump in average daily turnover, equity options saw a decline in notional open interest.
Commodity futures hit a record high, primarily driven by electricity futures contracts.
“India's external situation remains comfortable. Forex reserves were around the US$700 billion mark in August, and the volatility of the Rupee has been contained,” according to the report.
Monsoon momentum has picked up, with reservoir levels being robust and sowing activity nearing completion. The total cumulative rainfall from June 1 to September 5 was 8.8 per cent above normal.
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