Foreign investors have infused close to ₹8,000 crore into Indian equities in the first four trading sessions of June amid improved sentiment as Covid cases continue to decline in the country.
The inflow comes following a net withdrawal of ₹2,954 crore in May and ₹9,659 crore in April, data with depositories showed. According to the data, foreign portfolio investors (FPIs) put in a net sum of ₹7,968 crore in the Indian equity market during June 1-4.
“There is a sudden turn around in FPI strategy during the last two weeks. Starting early April till mid-May FPIs were consistent sellers in India. Perhaps the second wave of Covid-19, the consequent widespread restrictions on economic activity and its potential impact on growth and corporate earnings unnerved them,” VK Vijayakumar, Chief Investment Strategist at Geojit financial services said.
They moved money to other emerging markets. But the sheer momentum in Indian markets has forced FPIs to change their strategy. They have turned strong buyers now, he added.
Prior to April’s outflow, FPIs had been infusing money in equities since October. 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. Apart from equities, FPIs have poured just ₹22 crore in the debt markets during the period under review, reported news agency PTI.
S Ranganathan, Head of Research at LKP Securities said that the FPI buying was selective across categories like Technology, Private Insurers, Agrochemicals & Fintech amongst others. ”Smart FPI Investors have bought into broader market themes in India outside the Index which coupled with buying from Savvy Domestic Investors have reduced the valuation differential between Largecaps & Midcaps across sectors,” he added.
So far this year, overseas investors have put in a net sum of ₹51,094 crore in equities, however, they pulled out net amount of ₹17,300 crore from debt securities.
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