FPIs continue to bet on Indian equities; infuse ₹30,600 crore in Jun so far

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Foreign portfolio investors (FPIs) continue to show confidence in Indian equities and pumped more than ₹30,600 crore in June so far, as they bet on the country’s stable macroeconomic profile and sturdy corporate earnings outlook.

This came following a nine-month high investment of ₹43,838 crore in equities in May, ₹11,631 crore in April and ₹7,936 crore in March, data with the depositories showed.

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Before that, FPIs had pulled out over ₹34,000 crore during January-February.

Going forward, fund inflows could turn volatile, especially after the U.S. Fed reiterated its stance that more interest rate hikes may be needed to bring inflation below its target, albeit at a slower pace, Shrikant Chouhan, Head of Equity Research (Retail), Kotak Securities, said.

Further, the Bank of England hiking interest rates by 50 basis points could caution investors, especially the FPIs, as the rising valuation of Indian markets could become a challenge, he added.

According to the data, FPIs invested a net sum of ₹30,664 crore in Indian equities during June 1-23.

FPIs are showing confidence in Indian equities, pouring money primarily due to India’s stable macroeconomic profile and sturdy corporate earnings outlook, Hitesh Jain, Lead Institutional Equities at Yes Securities, said.

Himanshu Srivastava, Associate Director, Manager Research, Morningstar India, said sentiments have been boosted after the U.S. Federal Reserve pressed the pause button on its rate hike cycle, triggering flows into emerging markets like India. This indicates that FPIs are expecting better growth from the Indian markets.

Another factor that has aided flows into Indian shores is the concern over China’s economic recovery. There has also been an uncertain environment in the U.S. and U.K., he noted.

The flows in recent times can also be passive ahead of the rebalancing of the MSCI Index, which could lead to additional flows into Indian equities. 

Apart from equities, FPIs invested ₹3,051 crore in the debt market during the period under review due to the attractive yields offered by Indian debt securities.

So far in 2023, foreign investors have put in over ₹59,900 crore in Indian equities and close to ₹4,500 crore in the debt markets.