Foreign investors turn positive on India equities, pour in Rs 26,565 crore in June amid rebound in market

After two months of net outflow, foreign investors turned buyers in June, investing Rs 26,565 crore of Indian equities, according to the data with the depositories.  

The inflow came after a net outflow of Rs 25,586 crore in May on poll jitters and over Rs 8,700 crore in April on concerns over a tweak in India’s tax treaty with Mauritius and a sustained rise in US bond yields. 

Before that, FPIs made a net investment of Rs 35,098 crore in March and Rs 1,539 crore in February, while they took out Rs 25,743 crore in January. 

The net outflow now stood at Rs 3,200 crore in the month, data with the depositories showed.  

Geojit Financial Services Chief Investment Strategist V K Vijayakumar told PTI that said political stability, despite the BJP not getting a majority on its own, and the sharp rebound in markets aided by steady domestic institutional investors (DIIs) buying and aggressive retail buying, has forced the FPIs to turn buyers in India. 

Additionally, FPIs invested Rs 14,955 crore in the debt market in June. With this, FPIs’ investment in the debt market reached Rs 68,624 crore in 2024 so far. 

Looking ahead, attention will gradually shift towards the budget and Q1 FY25 earnings, which could determine the sustainability of FPI flows, Vipul Bhowar, Director, Listed Investments, Waterfield Advisors, said. 

They are favouring the financial, auto, capital goods, real estate, and select consumer sectors. 

“With government stability assured, impressive GDP performance and forecasts, stable consumer price index, ample forex reserves, and robust banking sector health, I anticipate a steady and substantial FPI inflow,” Kislay Upadhyay, smallcase Manager & Founder Fidelfolio, said. 

FPIs were sellers in IT, metals and oil and gas and are likely to continue the buying trend in financials.

According to V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, India’s inclusion in the JP Morgan Bond Index is certainly positive.  

“The debt inflows for 2024 so far stand at Rs 68,674 crore. In the long term, this will reduce the cost of borrowing for the government and reduce the cost of capital for corporates. This is positive for the economy and therefore for the equity market,” he said.  

In the long term, this will reduce the cost of borrowing for the government and the cost of capital for corporates. This is positive for the economy and therefore, for the equity and debt market.