Foreign investment in Indian equities touches ₹30,772 crore this July
Foreign investors have infused a whopping ₹30,772 crore into Indian equities in July, according to Himanshu Srivastava, Associate Director -Manager Research at Morningstar Investment Research India. This surge is driven by hopes of continued policy reforms, sustained economic growth, and a promising earnings season. Srivastava also claimed that the anticipation of a reform-oriented budget has boosted investor sentiment.
Market trends and investor sentiment
VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, stated that if the recent trend of weakness in the dollar and bond yields continues, Foreign Portfolio Investors (FPIs) are likely to maintain their buying spree. Vijayakumar added that both domestic and foreign investors, are closely monitoring possible changes in the long-term capital gains tax in the upcoming budget presentation on July 23.
Investment trends and market impact
Depository data revealed that FPIs have made a net inflow of ₹30,772 crore in equities until July 19. This follows an inflow of ₹26,565 crore in June due to political stability and a sharp market rebound. However, FPIs withdrew ₹25,586 crore in May over election uncertainties and more than ₹8,700 crore in April, due to concerns about changes in India's tax treaty with Mauritius and rising US bond yields.
FPI investment in debt market and sector preferences
In addition to equities, FPIs have invested ₹13,573 crore in the debt market during this period, pushing the debt tally to ₹82,197 crore for the year. Vijayakumar noted that during the fortnight ending July 15, FPIs were buyers in capital goods, automobiles, healthcare, telecom, IT, and oil and gas sectors. However, there was minimal buying interest in financial services which partly explains its poor performance in July.
