Strong institutional flows lift equity markets in July, shows data

India's market cap rises by Rs 25.5 trillion to Rs 463 ($5.5 trillion) in July

Robust capital flows from domestic and foreign portfolio investors (DIIs and FPIs) lifted equity markets in July. Despite the increase in capital market-related taxes, the benchmark Sensex and the Nifty rose over 3 per cent last month.

At the same time, the broader market Nifty Midcap 100 and the Nifty Smallcap 100 indices outperformed, gaining 4.5 per cent and 5.8 per cent, respectively. FPIs pumped in close to Rs 34,000 crore in July, while DIIs invested over Rs 20,000 crore. Export-oriented IT and pharma were the best-performing sectors during the month amid favourable cues from the US economy and markets. FMCG stocks also posted sharp gains on optimism around rural consumption boost following the Budget.
 

On the other hand, Nifty Metals and banking stocks underperformed. India's market cap rose by Rs 25.5 trillion to Rs 463 ($5.5 trillion) in July. ONGC, HDFC Life, and Infosys were the best-performing Nifty stocks, while Axis Bank, Tata Steel, and Bajaj Finance were the major laggards.

"Flows are coming in because money is being made. As long as money is being made, money will keep coming, and markets will go up. Most investors only remember the recent history. In the recent past, wherever the markets have fallen, it has been a buying opportunity. So, people lap up shares when the market falls. We have to see how long this optimism lasts. Unless the fall is not more than 10-15 per cent, investors won't panic. Fundamentals are not supporting the market anymore. It's the liquidity," said Ambareesh Baliga, independent equity analyst.