Foreign Investors Inject Over Rs 15,000 Crore into Indian Markets in June. Will Strong IT Results Attract More?

Foreign institutional investors (FIIs) have injected more than Rs 15,000 crore into Indian stock markets in June, marking a significant influx as the earnings season for the June quarter kicks off. Analysts believe that better-than-expected results from major IT companies could further boost FII interest.

“FIIs’ investment patterns can be unpredictable due to global influences. However, the strong performance from IT giants in their recent quarterly reports suggests potential for increased FII investments, especially in sectors where valuations remain reasonable,” commented Dr. VK Vijayakumar from Geojit Financial Services.

While domestic investors, particularly mutual funds, have consistently bought into the market throughout 2024, FIIs have shown mixed behavior, alternating between buying and selling.

“FIIs were net sellers in January, April, and May, amounting to a cumulative Rs 60,000 crore, but turned net buyers in February, March, and June, with a cumulative inflow of Rs 63,200 crore,” Vijayakumar added. This divergence is often influenced by external factors like US bond yields and global market valuations, whereas domestic institutional investor (DII) activity is largely driven by local market dynamics.

Increased FII participation has been a major driver behind the continuous upward movement of the Sensex and Nifty, both closing at record highs for the sixth consecutive week by the end of Friday. The positive start to the Q1 earnings season, especially with Tata Consultancy Services (TCS) exceeding market expectations, led to a significant 4.5% rise in the Nifty IT index in a single day.

Market analysts attribute the recent bullish sentiment to various factors including political stability, stable US Federal Reserve rates, robust domestic demand, and recent initiatives in IFSC Gift City to attract foreign and domestic investors alike.

All eyes are now on the upcoming Budget proposals scheduled to be presented on July 23, which are expected to provide further direction to the market.