Foreign portfolio investors (FPIs) have made strong buying in the first trading week of July month. From July 3rd to 7th, FPIs have infused a massive ₹21,944 crore, hinting that these inflows are likely to surpass investments made in June and May this year. FPIs are likely on the path of recording the fifth monthly buying in the Indian market in a row. This foreign funds inflow is driven by a strong rally in Indian markets with Sensex and Nifty 50 hitting new lifetime highs this week.
As per the NSDL data, FPIs have invested ₹21,944 crore in Indian equities from July 3rd up to July 7th.
This strong buying is in a matter of one trading week. This is already 46.54% of the total inflow of ₹47,148 crore recorded in June 2023, and 50.05% of the total investments of ₹43,838 crore made in May 2023.
As of now in the current year, June is the best month with most buying from FPIs.
Explaining the reason behind the strong inflow from FPIs, Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, “This U-turn in FPI flows which were negative ₹34626 crore in January and February (combined) this year has been the primary driver of the strong rally that we are witnessing in the market since the lows of March.”
He added, “FPIs have been steadily buying in financial services, automobiles, capital goods, and construction. Recently they have stepped up buying in FMCG and power. The selling trend in IT continues.”
According to Vijayakumar, FPIs strategy is focused more on country-specific factors rather than sectoral prospects within a country. That’s why they adopted the ‘Sell India, Buy China’ strategy in Jan and February. During these 2 months FPIs sold in financial services for ₹15744 crore. Now, pursuing the ‘Sell China, Buy India’ strategy, the same FPIs have bought stocks in financial services for ₹19229 crore in June alone and this buying trend continues.
Despite touching new historic highs, both Sensex and Nifty 50 ended the trading week from July 3rd to 7th with a marginal upside as the market’s condition was volatile. On Friday, Sensex ended at 65,280.45 down by 505.19 points or 0.77%, while Nifty 50 finished at 19,331.80 lower by 165.50 points or 0.85%.
Also, on July 7th, Sensex touched a new all-time high of 65,898.98 and Nifty 50 record high of 19,523.60.
Overall, in the trading week between July 3-7, Sensex jumped by 110 points or 0.17% and Nifty 50 outperformed in percentage terms with an upside of 48 points or 0.25%.
Going ahead, Vijayakumar said, if this buying trend continues, then monthly FPI flows in July will exceed the figures in May and June. He added, “Sustained FPI buying has pushed valuations into expensive, but not yet in bubble territory.”
Year-to-date, FPIs are net buyers with an inflow of ₹98,351 crore in Indian stocks.
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Updated: 08 Jul 2023, 05:30 PM IST