In April, foreign portfolio investors (FPIs) invested Rs 11,630 crore in the Indian equities markets as a result of the rupee’s gain and the fair valuation of companies.
This happened after FPIs invested a net amount of Rs 7,936 crore in stocks in March, primarily as a result of the US-based GQG Partners’ large-scale investments in the Adani Group companies. If the GQG investments in the Adani Group are taken into account, the net flow turns out to be negative.
The US Federal Reserve’s strict monetary policy is projected to result in continued volatility in the outlook for FPI flow going forward. According to US Fed minutes, a 25 basis point interest rate increase at the upcoming policy meeting may have an effect on FPI investments, according to Sonam Srivastava, founder of the financial advisory business Wright Research.
She noted that FPIs may still be drawn to Indian equities due to the stability of the Indian economy relative to other emerging countries and fair valuations.
FPIs invest Rs 8,643 car in equities in April on reasonable valuation of stocks
Data from the depositories show that FPIs had a successful start to the current fiscal year, investing Rs 11,630 crore in Indian shares in April.
FPIs demonstrated significant buying activity in the first half of April, signalling a resurgence of optimism in the Indian equity market. This euphoria, though, was tempered in the third week of the month by worries about high interest rates and bad economic data coming out of the US.
In the final few days of April, they once more became active buyers, and Anand Dalmia, co-founder and CBO of Fisdom, predicted that the influx of foreign capital will endure for a longer period of time.
According to Srivastava, the stabilisation of the global economy, a decrease in concerns about the US and European banking crises, a reasonable valuation of Indian stocks following consolidation, and India’s potential to generate positive returns over the medium to long term are the main drivers of the inflow in the month.
The rise of the rupee is yet another significant macro element that has skewed the FPI approach. The local currency has increased to 81.75 to the dollar from a low of 82.94 in late February of this year, according to VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
In addition, India’s current account deficit is decreasing, and if this pattern keeps up, the rupee may strengthen even more. In this situation, he continued, FPIs are probably going to increase inflows into India.
FPIs invested Rs 805 crore in the loan market during the review period in addition to equity investments.
“The money will start shifting from debt to equities when the rate hike ends in order to battle inflation. Between developed markets and other emerging markets, India is offering a greater potential, according to Divam Sharma, founder of Green Portfolio PMS.
With this, FPIs have so far withdrew Rs 14,580 crore from the stock market in 2023 and invested Rs 4,268 crore in the debt markets.
According to Fisdom’s Dalmia, the mid-April data on FPI inflows showed that the banking, automotive component, and information technology sectors were particularly alluring to foreign investors.
On account of aggressive rate increases by central banks around the world in 2022–23 and a record amount of Rs 1.4 lakh crore in 2021–22, FPIs withdrew a net amount of Rs 37,631 crore from Indian equities. Prior to these withdrawals, FPIs made record equity investments of Rs 2.7 lakh crore in 2020–21 and Rs 6,152 crore in 2019–20.
source from: msn.com
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