FPIs Invest Rs 30,772 Cr in Equities This July Amid Hopes for Economic Growth and Policy Reforms

Foreign investors have poured Rs 30,772 crore into Indian stocks so far this month. This surge is driven by hopes for continued policy reforms, steady economic growth, and better-than-expected earnings reports. The upcoming reform-oriented budget has also boosted investor confidence, according to Himanshu Srivastava, Associate Director at Morningstar Investment Research India.

VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, mentioned that if the current trend of a weaker dollar and lower bond yields continues, foreign investors are likely to keep buying. Both domestic and foreign investors are closely watching for potential changes in the long-term capital gains tax in the budget, set to be presented on July 23.

Data from depositories shows that Foreign Portfolio Investors (FPIs) have invested a net amount of Rs 30,772 crore in equities up to July 19. This follows an inflow of Rs 26,565 crore in June, driven by political stability and a market rebound. Prior to this, FPIs pulled out Rs 25,586 crore in May due to election concerns and over Rs 8,700 crore in April due to worries about changes in India’s tax treaty with Mauritius and rising US bond yields.

Srivastava explained that the formation of the NDA government for a third term has positively impacted investor sentiment, raising hopes for ongoing policy reforms and economic growth. Additionally, a strong earnings season has boosted investor confidence.

Besides equities, FPIs have invested Rs 13,573 crore in the debt market during this period, bringing the total debt investment to Rs 82,197 crore for the year so far.

During the first half of July, FPIs bought stocks in the auto, capital goods, healthcare, IT, telecom, and oil and gas sectors. However, there was a noticeable lack of buying in financial services, contributing to the sector’s poor performance in July, noted Vijayakumar.

In July 2024, the investment flows to emerging markets were mixed. Countries like Brazil, Indonesia, Malaysia, the Philippines, and South Korea saw inflows, while Taiwan, Thailand, and Vietnam experienced outflows.