HomeLatest NewsFPIs invested Rs 49,250 crore in August on strong corporate earnings

FPIs invested Rs 49,250 crore in August on strong corporate earnings

After turning net buyers last month, foreign investors have been aggressive buyers of Indian equities and have pumped in Rs 49,250 crore so far in August on improving corporate earnings and macro fundamentals. This was much higher than the net investment of about Rs 5,000 crore by foreign portfolio investors (FPIs) in the whole of July, data from depositories showed.

FPIs were net buyers for the first time in July, marking nine consecutive months of massive net outflows, which began in October last year. Between October 2021 and June 2022, they sold Rs 2.46 lakh crore in the Indian equity market. In the coming months, FPI flows will largely depend on commodity prices and geopolitical concerns, corporate results and interest rate movements from the US Fed, said Vivek Banka, founder member of fintech platform Goalteller.

US Fed Chairman Jerome Powell’s ultra-hawkish stance at Jackson Hole is a short-term negative for equity markets. This could affect FPI inflows in the short term, said VK Vijayakumar, chief investment strategist at Geojit Financial Services. FPIs pumped a net amount of Rs 49,254 crore into Indian equities between August 1-26, according to depository data. This is their highest investment so far this year.

Strong corporate earnings are the primary reason for inflow of funds by FPIs despite high crude oil prices and fears of a global recession, said Joy Prakash Gupta, founder of Dhan. Srikanth Chauhan, Head – Equity Research (Retail), Kotak Securities, attributed the inflow to the improvement in the macro fundamentals of corporate earnings.

Foreign investors continued to buy equities in August despite rising US bond yields and a stronger dollar. Vijayakumar said the fact that FPIs are buying in India despite a strong dollar is a reflection of their vote of confidence in the Indian economy. U.S. inflation eased from a 40-year high in June to 8.5 percent in July due to lower gasoline prices.

Himanshu Srivastava, associate director – manager research, Morningstar India, said the net inflows over the past few weeks can be attributed to multiple factors. Although inflation has continued at high levels, it has risen less than expected recently, thus improving sentiment. This has given rise to expectations that the US Fed will be relatively less aggressive, than previously expected, with its rate hikes. As a result, it has also somewhat reduced fears of a recession in the US, thereby improving sentiment and investors’ risk appetite, he said.

On the domestic front, the correction in Indian equity markets has given investors a good buying opportunity, he added. FPIs use this opportunity to select and invest in high-quality companies. They are now buying financials, capital goods, FMCG and telecom stocks.

Also, FPIs deposited a net amount of Rs 4,370 crore in the debt market during the month under review. Apart from India, flows were positive to Indonesia, South Korea and Thailand, while it was negative to the Philippines and Taiwan during the period under review.

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