FPIs start July as net buyers of Indian equities, invest Rs 7,962 crore in opening week

Foreign portfolio investors (FPIs) continued their shopping spree in India with purchase of equities worth Rs 7,962 crore in the first five sessions in July. Their total investments now stand at Rs 11,163, so far in 2024.

In June, FPIs had bought Indian shares worth Rs 26,565 crore after remaining net sellers in April and May when they sold equities worth Rs 8,671 crore and Rs 25,586 crore, respectively.

In February and March, they were net buyers at Rs 1,539 crore and Rs 35,098 crore, respectively, after starting the year on a negative note in January when they offloaded shares worth Rs 25,744 crore.

On Friday, the foreign institutional investors (FIIs) were net buyers at Rs 1,241.33 crore while the domestic institutional investors were net sellers at Rs 1,651.36 crore.

In the fortnight ending June 30, FPIs bought heavily in telecom and financial services, said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services. They were also buyers in auto, capital goods, healthcare and IT while remaining sellers in metals, mining and power sectors on the back of faster-than-estimated run in the recent months, this analyst said.

Vijayakumar highlighted how FPIs had been more keen on the India debt markets than the equities in 2024, so far. He attributed the divergence in equity and debt inflows to a host of factors, including the hype around inclusion of Indian government bonds in the JP Morgan EM Government Bond Index coupled with the "front running by investors" contributing to the current trends.

"Total foreign portfolio investment in equity this month, through July 5, stands at Rs 7,962 crore. Debt investment during the same period is Rs 6,304 crore. For CY 2024, so far, FPIs have invested only Rs 11,162 crore in equity. But the FPI investment in debt for the same period stands at a massive Rs 74,928 crore," Vijayakumar said.

A significant feature of FPI flows is that their selling in India has been triggered by external factors like rising bond yields in the US and low valuations in other emerging markets. When that situation changes they again become buyers in India. In fact in recent days they have been buying the same segments and stocks at a higher price than the price at which they sold. “This experience tells us that FPI selling in India is an opportunity for domestic investors," he added.

Milind Muchhala, Executive Director at Julius Baer India lamented that the FPI activity had remained muted in the past three years. It has been on account of weak emerging market flows amid a strengthening USD and also due to the significant outperformance / premium valuations of India versus EM peers such as China.

Also Read: Block deals worth over Rs 9,947 crore this week. HDFC Bank, Infosys, Adani Ports among stocks with major action

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)