FPIs inject ₹52,910 crore into Indian market this July
Foreign portfolio investors (FPIs) have infused nearly ₹52,910 crore into India's equity and debt markets until July 26. This significant investment comes in the wake of the Union Budget 2024-2025, that aims to foster a stable and mature equity investment environment. The budget positions India to become the world's third-largest economy, according to data from the National Securities Depository Limited (NSDL).
FPIs's investment breakdown and year-to-date figures
The NSDL data reveals that FPIs have invested ₹33,688 crore in equity and ₹19,222 crore in debt so far this month. The total FPI investment for the year-to-date stands at ₹36,888 crore in equity and a substantial ₹87,846 crore in debt. This influx of funds into domestic mutual funds is attributed to positive market sentiments and the government's assurance of continued reforms.
Budget emphasizes capital allocation and tax increases
The recent budget emphasizes capital allocation and policy measures designed to boost a majority of sectors, fostering long-term economic growth. It proposes a rise in short-term capital gains (STCG) tax from 15% to 20%, and long-term capital gains (LTCG) tax from 10% to 12.5%. Pantomath Capital Advisors suggest that while this may affect market sentiment in the short term, the positive long-term outlook for the equity market will not alter inflows.
Budget allocates funds for infrastructure and employment
The budget also allocates funds for infrastructure and rural sectors while focusing on employment generation schemes. These initiatives are expected to stimulate economic activity and consumption. Manufacturing sentiments have improved in the April-June quarter, indicating that India's growth story remains intact. A recent survey revealed that business activity accelerated to a three-month high in July, due to a surge in the services sector and increased manufacturing momentum.
