Amid improved sentiment as Covid cases continue to decline in the country, foreign investors have implanted nearly ₹8,000 crore into Indian equities in the first four trading sessions of June.
The inflow comes following a net withdrawal of ₹2,954 crore in May and ₹9,659 crore in April, data with depositories showed. Foreign portfolio investors (FPIs) put in a net sum of ₹7,968 crore in the Indian equity market during June 1-4.
The second wave of Covid-19, the consequent widespread restrictions on economic activity and its potential impact on growth and corporate earnings discouraged the FPIs. They were consistent sellers in India during the last two weeks, starting early April till mid-May.
They preferred to move money to other emerging markets. But the sheer momentum in Indian markets has forced FPIs to reverse their strategy, turning into strong buyers now.
If we look at this year, overseas investors have put in a net sum of ₹51,094 crore in equities, but at the same time, they pulled out net amount of ₹17,300 crore from debt securities.
FPIs had been infusing money in equities since October, prior to April’s outflow. They invested over ₹1.97 lakh crore in equities during October 2020 to March 2021. This included a net investment of ₹55,741 crore in the first three months of this year. In addition to equities, FPIs have contributed just ₹22 crore in the debt markets during the period under review.
The FPIs have been picky buyers across categories like Technology, Private Insurers, Agrochemicals & Fintech amongst others. But smart FPI Investors have bought into broader market themes in India outside the Index. Buying from Savvy Domestic Investors have reduced the valuation differential between Large caps & Midcaps across sectors.
Smrutirekha Bhoi