FPI Inflows Surge in Indian Equity Market, Boosting Investor Confidence

Foreign Portfolio Investors (FPI) infused Rs 7,962 crore into the Indian equity market in early July, with this year's total investment crossing Rs 1 lakh crore. This surge has been accompanied by optimistic market sentiment ahead of the upcoming Union Budget and Q1FY25 earnings season.

Foreign Portfolio Investors (FPI) have infused Rs 7,962 crore into the Indian equity market in the first week of July, according to data from the National Securities Depository Limited (NSDL). This substantial investment pushes total FPI inflows in India to Rs 103,934 crore in 2023.

Other emerging markets have also seen significant FPI activity. Indonesia received USD 127 million, Malaysia got USD 81 million, the Philippines saw a modest inflow of USD 5 million, and South Korea attracted a record USD 927 million in early July. Conversely, equity markets in Thailand and Vietnam experienced outflows of USD 69 million and USD 68 million, respectively.

According to Shrikant Chauhan, Head of Equity Research at Kotak Securities, market optimism is buoyed by anticipated government support for the economy, particularly the manufacturing sector, in the upcoming Union Budget. The market remains upbeat, with IT services gaining favor ahead of the Q1FY25 earnings season, although FPI flows are expected to be volatile. In June, FPIs turned net buyers in Indian markets with Rs 26,565 crore in net investments, following a period of selling. In contrast, May saw FPIs withdraw Rs 25,586 crore, and April recorded a net withdrawal of Rs 8,671 crore. This pattern of fluctuations has now given way to a renewed confidence in India's market potential and economic outlook.

(With inputs from agencies.)