FPIs boost stakes in Indian equities

Foreign portfolio investors (FPIs) continued to beef up their stakes in Indian equities by recording Rs20.85 billion net investments in the first half of August amid signs of improving buoyancy in economic activity.

As per depositories data, while overseas investors pumped in a net Rs20.85 billion between August 2-13, they pulled out a net Rs20.44 billion from the debt segment in the same period.

The inflows in August can be attributed to an improvement in economic activity in the domestic market, even though concerns over the third wave of Covid-19 lingers globally, said Shrikant Chouhan, executive vice president, equity technical research at Kotak Securities.

The FPIs have made a comeback after a net outflow of Rs113.08 billion in July. With the investments in August, the net FPI investment in the equities segment in 2021 now stands at Rs511.21 billion.

The week-ended Friday witnessed surge in the Indian equity market with both the BSE Sensex and the Nifty50 on the National Stock Exchange touching new highs. The Sensex crossed the landmark 55,000 mark for the first in its history during the week. On Friday, Sensex hit its all-time high of 55,487.79 points.

During the week, improving macroeconomic data boosted the investor sentiments. Since markets are at record highs with stretched valuations, some profit booking by FPIs can be expected, going forward, Vijayakumar of Geojit Financial Services said.

On Thursday, the Index of Industrial Production (IIP) for June showed a rise of 13.6 per cent from a decline of (-) 16.6 per cent reported for the like month a year ago

Further, data furnished by the National Statistical Office (NSO) showed that the Consumer Price Index (CPI) slipped to 5.59 per cent last month from 6.26 per cent in June.

Going ahead, analysts expect the bullish momentum to continue, and foreign portfolio investments too are likely to rise further.

Analysts said the return of overseas investors is amid signs of the rupee weakening further against a strong dollar on rising domestic inflationary concerns. They also noted that the Reserve Bank’s dollar buying spree is expected to support this trend.

Markets are buoyed by a set of domestic indicators such as recovery in PMI prints, lower unemployment rate in CMIE surveys and recovery in GST receipts, even as concerns over the third wave lingered in global markets, analysts said.

issacjohn@khaleejtimes.com