India back on shopping list of foreign investors; FPIs buy shares worth $3.7 billion in 12 days
Foreign portfolio investors (FPIs) have maintained their buying streak in Indian equities for the 12th consecutive session. (Photo: Reuters)
Foreign portfolio investors (FPIs) have continued their buying streak in Indian equities for the 12th consecutive session, purchasing $141 million worth of shares on Tuesday.
Since June 7, FPIs have cumulatively invested $3.7 billion in Indian stocks, following the reduction of uncertainty regarding policy continuity at the Center. During the same period, domestic institutional investors (DIIs) bought $1.6 billion worth of shares.
The last similar extended buying spree from foreign investors lasted 26 days through June 2, 2023, according to data available.
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Investor sentiment has also been bolstered by India’s current account swinging to a surplus after ten quarters of deficits. For the quarter ending March 2024, the current account surplus stood at $5.7 billion, or 0.6% of GDP, compared to a deficit of $8.7 billion in the previous quarter.
Additionally, the rupee, which had hit a record low of 83.65, has gained 0.30% against the US dollar over the last three sessions, closing Tuesday’s session higher at 83.43. This positive movement in the currency market coincided with both the Sensex and Nifty50 gaining 1% each, reaching record highs.
Interestingly, this renewed buying interest from FPIs comes after two months of net selling. In May, overseas investors sold shares worth over $3 billion, following a sell-off of just over $1 billion in April.
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The resumption of FPI buying has helped mitigate this year’s outflows, which had nearly reached $5 billion just two days after the election results. Over the past few years, FPI selling has been particularly intense, leading to the underperformance of bank stocks, especially private ones, in which FPIs have higher weightages.
In the broader emerging markets landscape, South Korea has attracted the highest inflow of $16.5 billion in 2024 so far, followed by Taiwan with an inflow of $4.7 billion.
Analyst on FPIs Inflow’s
Commenting on the FPIs inflows in Indian Markets Atul Parakh, CEO of Bigul said that the recent surge in foreign portfolio investment (FPI) in India is a significant positive signal. The $3.7 billion inflow over just 12 days indicates renewed confidence in the Indian market. This trend likely stems from India’s robust economic fundamentals, potential for growth, and relative stability compared to other emerging markets.
He also added that factors such as moderating inflation, expectations of policy rate cuts, and attractive valuations may be driving this interest. However, it’s crucial to monitor global economic conditions, geopolitical events, and domestic policy changes that could impact this momentum. While encouraging, sustained inflows will be key to determining if this represents a long-term shift in foreign investor sentiment towards India.