FPIs extend buying streak in Indian equities, infuse ₹43,804 cr in July so far

Foreign institutional investors (FIIs) pumped ₹3,371 crore in Indian stocks on July 20. However, on Friday, FIIs turned net sellers and offloaded ₹1,998.7 crore as markets snapped its six-day winning streak dragged by IT stocks and industry heavyweights Reliance Industries and Hindustan Unilever Ltd. FIIs have pulled off a 700 point rally in the Nifty since the 3rd of this month at the start of the earnings season for the first quarter, according to analysts.

Also Read: Nifty rallies 15% in FY24 so far, on track to hit 20,000-mark led by Q1 earnings, FII momentum

Analysts say that India is the largest recipient of FPI flows YTD among emerging markets. ‘’In July, through 21st FPIs have invested ₹43,804 crore in India. This figure includes investment through stock exchanges, primary market and bulk deals,” said analysts.

‘’FPIs continue to invest in financials, automobiles, capital goods, realty and FMCG. FPI buying in these sectors have contributed hugely to the surge in prices of stocks in these sectors and the Sensex and Nifty scaling record highs,” said Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

‘’The concern, however, is the rising valuations. At high valuations some negative triggers can lead to sharp correction. This happened on Friday when the Sensex tanked by 887 points on negative news from Infosys and HUL,” added Vijaykumar.

Market Insight

Domestic markets continued its winning streak for the sixth consecutive session on July 20, driven by banking, oil & gas, and healthcare stocks. The sentiment remained upbeat due to the the momentum led by first quarter results of fiscal 2023-24 (Q1FY24) and foreign capital inflow on India’s healthy macroeconomic outlook even amid mixed global cues.

The BSE benchmark had jumped 474.46 points or 0.71 per cent to settle at its fresh all-time closing high of 67,571.90 on Thursday, extending its winning momentum to the sixth day. During the day, it rallied 521.73 points or 0.77 per cent to hit its lifetime intra-day peak of 67,619.17.

The Nifty had climbed 146 points or 0.74 per cent to end at its record closing high of 19,979.15. During the session, it had soared 158.7 points or 0.80 per cent to reach its fresh record high of 19,991.85.

However, in the week’s last session, benchmark indices tumbled in early trade on Friday after a non-stop record-breaking rally, dragged down by IT behemoth Infosys after the company slashed its FY24 growth outlook. Decline in share prices of market bluechip firms Reliance Industries and Tata Consultancy Services (TCS) also added to the bearish trend in equities.

Sensex saw a gap-down opening and extended losses and cracked 1,038 points to the intraday low of 66,533.74. The index closed with a loss of 888 points, or 1.31 per cent, at 66,684.26 while the Nifty ended with a loss of 234 points, or 1.17 per cent, at 19,745.

Broadly, the indices were dragged by IT stocks such as Infosys, HCL Tech, and Wipro, while resilience in PSU and bank stocks including State Bank of India and Kotak Mahindra Bank limited further decline.

In addition, Nifty has rallied by 15 per cent since the beginning of current fiscal (April 1, 2023) and four per cent month till date, said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd.

Market analysts reckon that the Nifty index will hit the 20,000-mark soon on Q1FY24 momentum and sustained foreign capital inflow.

Updated: 22 Jul 2023, 08:42 PM IST