Foreign Portfolio Investment (FPI) in the Indian equity market turned positive in June with a net investment of Rs 12,170 crore, according to data from NSDL.
The data highlights that by 21 June, FPIs had injected this amount into the equity market for the month. However, the overall net investment for the calendar year 2024 remains negative, with net selling amounting to Rs 11,194 crore.
On the last trading session of the previous week, FPIs invested Rs 2,250.20 crore in the Indian markets. The shift in FPI behaviour has been particularly noticeable since 10 June, influenced by the election results.
"Foreign Portfolio Investors (FPIs) have altered their position in the equity market following the election results, injecting Rs 23,786 crore since June 10th. There are three primary reasons for this positive inflow. First, the continuity of the government assures ongoing reforms. Second, the Chinese economy is decelerating, as evidenced by a 12 per cent decline in copper prices over the past month. Third, certain block deals in the market have been eagerly taken up by FPIs," said Sunil Damania, Chief Investment Officer, MojoPMS.
In contrast, may saw FPIs withdraw Rs 25,586 crore from the equity market, while in April, they were net sellers with a withdrawal of Rs 8,671 crore. This trend of outflows had created a cautious atmosphere in the market.
Market experts note that the recent FPI inflows are concentrated in a select few stocks rather than being spread across the market or sectors. They believe that high valuations currently commanded by the Indian equity market will constrain FPI inflows. While June's figures show a positive net investment, the overall sentiment among FPIs remains one of cautious optimism, tempered by valuation concerns.
This strategic approach by foreign investors highlights their close monitoring of economic indicators and the government's steps before the presentation of the budget. As the year progresses, the balance of net investments will likely depend on the evolution of these factors, particularly in the context of global economic conditions and domestic policy continuity. (ANI)
