As per the NSDL data, FPIs invested ₹47,148 crore in Indian equities during June month. The appetite for equities is much strong than compared to other market instruments.
The month under review saw some huge block deals in stocks like Adani Group-backed stocks, Shriram Finance, Delhivery, HDFC AMC, Timken India, and Kalyan Jewellers among others.
During this month, Sensex has skyrocketed by a whopping 2,171.45 points or 3.47%. While Nifty 50 has zoomed by 654.95 points or 3.53%.
In May 2023, FPIs invested ₹43,838 crore in Indian stocks. Meanwhile, FPIs were net sellers with an outflow of ₹50,203 crore in June last year.
Overall, in the first half of 2023 (January to June), FPIs are net buyers with an inflow of ₹76,407 crore.
Talking about FPIs inflow, Dr. V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said, “Sustained FPI flows triggered by India’s steadily improving macros have taken markets to record highs. The major reason for the sustained FPI flows into India is the reversal in FPI strategy.”
According to Vijayakumar, January and February 2023 saw massive flows to China triggered by China’s opening up after Covid and expectations of a revival in growth and earnings. The FPI strategy was ‘Sell India, Buy China’. FPI investment in India in January and February combined was negative ₹34146 crore. This strategy was based on the view that China is cheap and India is expensive.
“This strategy proved to be a mistake since the prospects of China deteriorated and that of India improved. The Chinese economy is struggling and growth is expected to be muted for many years to come,” he added.
Furthermore, Vijayakumar said, “India’s macros are steadily improving, and GDP and corporate earnings growth have the potential to improve further from here. So FPIs have reversed their strategy to ‘Buy India, Sell China’.”
And hence, FPIs invested ₹47148 crore in June on top of ₹43838 crore in May. As per the expert, “This is a big change”.
Also, he highlighted that it is important to note that Japan is attracting the largest FPI flows this year in response to reforms and improving economic prospects after many years.
Thereby, Vijayakumar said, “FPI money is chasing performance and prospects.” Among preferred sectors, he revealed that FPIs continued to invest in financials, automobiles, capital goods, and construction-related stocks.
Moreover, in June 2023, in other market instruments, FPIs were net buyers in the debt market with an inflow of ₹9,178 crore, while they invested a meager ₹173 crore in hybrid but were net sellers with an outflow of ₹242 crore in debt-VRR pool.
Overall, in June month, FPIs invested ₹56,258 crore in the Indian market including equities, debt, debt-VRR, and hybrid. This was due to strong buying in equities. From January to June 2023, the overall market has seen an inflow of ₹93,349 crore from FPIs.
Going ahead, Vijayakumar said, “Valuations in India are rich, from a short-term perspective. Therefore, even while continuing to invest in India, FPIs are likely to turn a bit cautious.”
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Updated: 01 Jul 2023, 06:12 PM IST