FPIs Pump ₹7,320 Crore into Indian Equities in August: Here’s Why Investors are Watching Closely

Foreign Portfolio Investors (FPIs) remained net buyers of Indian stocks in August, purchasing shares worth ₹7,320 crore. This brings their total investment in Indian equities to ₹42,886 crore for 2024 so far.

In July, FPIs bought shares worth ₹32,365 crore, while in June, they purchased ₹26,565 crore worth of stocks. However, they were net sellers in April and May, offloading shares worth ₹8,671 crore and ₹25,586 crore, respectively. Earlier in the year, they were also net buyers in February and March, with investments of ₹1,539 crore and ₹35,098 crore. They started 2024 by selling ₹25,744 crore worth of shares in January.

On Friday, Foreign Institutional Investors (FIIs) were net buyers of Indian equities, investing ₹5,318.14 crore, while Domestic Institutional Investors (DIIs) also bought shares worth ₹3,198.07 crore.

According to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, FPI investments in Indian equities have been gradually declining due to high valuations in the Indian market. He noted that with the Nifty index trading at over 20 times the estimated earnings for FY25, India is now the most expensive market in the world. FPIs are more interested in investing in cheaper markets, which is why their buying activity is focused on the ‘primary market and others’ category. In contrast, they have been consistent sellers in the cash market because of these elevated valuations.

Vijayakumar also mentioned that FPIs are buying in the debt market due to the stable Indian Rupee (INR) this year, and this stability is expected to continue.

Vaibhav Porwal, Co-founder of Dezerv, shared a similar view. He said that the high valuations in the Indian equity market are causing FIIs to be cautious. They have been selectively investing in defensive sectors like healthcare and FMCG. Porwal also mentioned that if the US Federal Reserve begins cutting rates in September, as expected, FIIs might shift their focus to emerging markets with more attractive valuations, though he doesn’t see India being a major beneficiary of these flows.