New Delhi[India], Foreign portfolio investors (FPIs) significantly increased their investments in Indian stock markets in the last week of June, according to data from the National Securities Depository Limited (NSDL).
Net investment by FPIs stood at Rs 16,672.2 crore over the past week, with a notable rise on Friday alone amounting to Rs 6,966.08 crore. This rally marks a change in FPI sentiment for the month.
Overall, FPIs have pumped in a net investment of Rs 26,565 crore into Indian equities in June, following initial selling earlier in the month after the election results were announced. This change in strategy reflects changing market dynamics and perceptions of political stability despite recent events.
"FPI's investment of Rs 26,565 crore in shares in June marks a reversal of its sell-off strategy in the previous two months. Political stability despite the BJP not winning a majority on its own and the strong rally in markets helped by steady DII buying and aggressive stock “Retail buying has forced FPIs to look for buyers in India. It seems that FPIs have realized that selling in the higher yielding market would be a wrong strategy. FPI purchases can be sustained as long as there is no sharp rise in US bond yields,” said V K Vijayakumar, chief investment strategist, Geojit Financial Services.
Experts also pointed out the positive impact of India's inclusion in the JP Morgan bond index, which has attracted significant debt inflows worth Rs 68,674 crore in 2024. This inclusion is expected to reduce the borrowing costs of the government and reduce capital expenditures by corporations, thereby positively supporting the overall economy and stock markets.
NSDL data further highlights that FPIs increased their investments in real estate, telecom and financial sectors during June, while reducing exposure to IT, metals and oil and gas sectors. Analysts anticipate that FPI will remain interested in financial stocks in the future.
During the previous months, in May, FPIs withdrew Rs 25,586 crore from the stock market, while in April they were net sellers with a withdrawal of Rs 8,671 crore. This trend of outflows created selling pressure in the Indian stock market.
But now the increase in FPI investments indicates renewed investor confidence in India's market potential and economic prospects.
Net investment by FPIs stood at Rs 16,672.2 crore over the past week, with a notable rise on Friday alone amounting to Rs 6,966.08 crore. This rally marks a change in FPI sentiment for the month.
Overall, FPIs have pumped in a net investment of Rs 26,565 crore into Indian equities in June, following initial selling earlier in the month after the election results were announced. This change in strategy reflects changing market dynamics and perceptions of political stability despite recent events.
"FPI's investment of Rs 26,565 crore in shares in June marks a reversal of its sell-off strategy in the previous two months. Political stability despite the BJP not winning a majority on its own and the strong rally in markets helped by steady DII buying and aggressive stock “Retail buying has forced FPIs to look for buyers in India. It seems that FPIs have realized that selling in the higher yielding market would be a wrong strategy. FPI purchases can be sustained as long as there is no sharp rise in US bond yields,” said V K Vijayakumar, chief investment strategist, Geojit Financial Services.
Experts also pointed out the positive impact of India's inclusion in the JP Morgan bond index, which has attracted significant debt inflows worth Rs 68,674 crore in 2024. This inclusion is expected to reduce the borrowing costs of the government and reduce capital expenditures by corporations, thereby positively supporting the overall economy and stock markets.
NSDL data further highlights that FPIs increased their investments in real estate, telecom and financial sectors during June, while reducing exposure to IT, metals and oil and gas sectors. Analysts anticipate that FPI will remain interested in financial stocks in the future.
During the previous months, in May, FPIs withdrew Rs 25,586 crore from the stock market, while in April they were net sellers with a withdrawal of Rs 8,671 crore. This trend of outflows created selling pressure in the Indian stock market.
But now the increase in FPI investments indicates renewed investor confidence in India's market potential and economic prospects.
