FPIs' buying spree continues; invest Rs 45,365 Cr in equities in July

Foreign Portfolio Investors (FPIs) continue with their buying spree in July with a net infusion of Rs 45,365 crore in Indian equity markets on stable macroeconomic fundamentals and steady earnings growth.

However, it appears that the momentum of buying has slowed down and FPIs have turned sellers during the two trading days ahead of the US Federal Reserve meeting on Wednesday.

"The US Fed signalled the possibility of more hikes going ahead and ruled out the likelihood of rate cuts any time soon...The potential impact of rate hikes on global liquidity would have led foreign investors to re-evaluate their investment decisions," Himanshu Srivastava, Associate Director—Manager Research, Morningstar India, said.

According to the data, FPIs have been continuously buying Indian equities since March. The said figure (Rs 45,365 crore) includes investment through bulk deals and primary markets, apart from investment through stock exchanges.

Also, this figure marks the third straight month, when the net flows have surpassed Rs 40,000 crore mark. It was Rs 47,148 crore in June and Rs 43,838 crore in May. During the last three months, from May to July, FPIs invested Rs 1.36 lakh crore in Indian equity markets.

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

V K Vijayakumar, Chief of Investment Strategy at Geojit Financial Services, said that an important feature of FPI investment is that its buy or sell strategy is influenced by external factors like the dollar index, the US bond yields, and global market trends, apart from domestic fundamentals.

This is the reason why FPIs, during the last three months, have been buying the same financial stocks which they have been selling in the first three months of 2023, he added.

"The Indian economy continues to be stable, which is positive. This would ensure that India continues to be on FPIs radar as a preferred investment destination," Morningstar India's Srivastava said.

Apart from equities, overseas investors injected Rs 3,340 crore into the Indian debt market during the period under review.

With this, inflow in the equity market reached Rs 1.22 lakh crore, and while the same for debt was at over Rs 20,000 crore so far this year, data with the depositories showed.

In terms of sectors, financials, automobiles, capital goods, real estate, and FMCG continue to attract the bulk of FPI investment.