Foreign investors have put in Rs 30,945 crore in the Indian equities in May so far, driven by strong macroeconomic fundamentals, prospect of reducing interest rates, positive earnings outlook and falling valuations of stocks.
With this, net inflows by Foreign Portfolio Investors (FPIs) reached Rs 16,365 crore in 2023 so far, data available with the depositories showed.
Going forward, FPI investment in India is expected to continue since the prospects for the Indian economy and corporate earnings growth appear bright now, VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.
According to data from the depositories, FPIs invested a net sum of Rs 30,945 crore in Indian equities during May 2 – May 19.
This came following a net infusion of Rs 11,630 crore in equities in April and Rs 7,936 crore in March.
The March investment was mainly driven by bulk investment in the Adani Group companies by the US-based GQG Partners. However, if one adjusts for the investments of GQG in Adani Group, the net flow is negative.
Moreover, in the first two months of the year, FPIs pulled out over Rs 34,000 crore.
Divam Sharma- Founder at Green Portfolio PMS, said the pause in rate hikes by the Reserve Bank of India (RBI) was the primary trigger for inflows into Indian equities.
Further, India’s GDP growth is expected to be 7.5 per cent in 2023-24, higher than the global average, and coupled with low inflation and a current account surplus, this makes India an attractive investment destination, Sonam Srivastava – Founder of Wright Research, said.
In addition, a growth forecast for Indian corporate earnings and the recent fall in Indian equities, now trading at a lower price-to-earnings ratio than the historical averages, have also contributed to the surge in FPI investment, she added.
Apart from equities, FPIs have invested Rs 1,057 crore in the debt market so far in May.
In terms of sectors, FPIs have been consistent buyers in a host of sectors such as autos and auto components, capital goods, FMCG, health care, telecom, realty and oil & gas.
They were big buyers in financials as they invested Rs 8,382 crore during the period under review.