FPIs to bet on equities; infuse Rs 30,600 cr in first fortnight of July

Foreign Portfolio Investors (FPIs) flow into the Indian equity market remained unabated as they invested over Rs 30,600 crore in the first fortnight of this month, driven by the country's robust economic growth and strong corporate earnings.

If this trend continues, investment by FPIs in July will exceed the figures recorded in May and June, which were Rs 43,838 crore and Rs 47,148 crore respectively.

With this, inflow in the equity market reached Rs 1.07 Trillion so far this year, data with the depositories showed.

Market analysts are of the view that the outlook for FPI inflows into Indian equities remains quite bright and broad-based.

"The concern, however, is the rising valuations which are getting stretched. The valuations in China are hugely attractive now compared to valuations in India and, therefore, the 'Sell China, Buy India' policy of FPIs cannot continue for long, "V K Vijayakumar, Chief Investment Strategy at Geojit Financial Services, said.

According to the data, FPIs have been continuously buying Indian equities since March and infused Rs 30,660 crore this month (till July 14).

This figure includes investment through bulk deals and primary market, too, apart from investment through stock exchanges.

Before March, overseas investors pulled out Rs 34,626 crore collectively in January and February.

The incessant buying by FPIs could be attributed to a variety of factors such as the country's robust economic growth, strong corporate earnings, and relatively competitive valuations of Indian equities compared to other markets, Sonam Srivastava, Founder of Wright Research, said.

Further, the emerging capex cycle, the revival of Indian manufacturing, and a strong banking sector all seem to be playing a strong role in India's attractive story, she added.

Divam Sharma, Founder of Green Portfolio, said the major reason for the inflows was the investments into Adani group companies.

Additionally, there is confidence in the US that the Federal Reserve will start reversing the interest rates soon and also that the chances of recession in the US are minimal, which are triggering a rally in US markets and also increasing the appetite for growth markets including India, he added.

"The decline in the dollar index to below 100 on Friday, the lowest level in one year, is favorable to emerging markets. India is the largest recipient of FPI flows YTD among emerging markets, " Geojit's Vijayakumar said.

Apart from equities, overseas investors injected Rs 1,076 crore into the Indian debt market during the period under review.

In terms of sectors, FPIs continue to invest in financials, automobiles, capital goods, realty, and FMCG.