With this investment, total outflows so far in 2024 (till June 21) have reached Rs 11,194 crore, according to vault data.
Sunil Damania, chief investment officer at Mojo PMS, said foreign portfolio investor (FPI) inflows are likely to remain limited going forward due to the current high valuation in the Indian equity market.
FPIs have been watching the election results on the sidelines and have so far been withdrawing from India in 2024, barring March (where they saw inflows of Rs 35,000 crore).
“Though the general election results were unexpected and resulted in lower approval ratings than expected, the market welcomed the once again stable government and continuity in power,” said Kisrey Upadhyay, small case manager and founder of Fidelfolio. Moreover, business sentiment remained strong and policy continuity boosted market confidence. Damania cited three main reasons for the positive inflows. “First, continuity in power ensures that reforms will continue. Second, the Chinese economy is slowing and copper prices have fallen 12 percent in the past month. Third, certain block trades in the market are being eagerly underwritten by FPIs,” Damania said.
However, these FPI inflows are concentrated in a few specific stocks rather than being spread across markets and sectors.
Moreover, expectations of a pro-growth budget also boosted investor sentiment, said Himanshu Srivastava, associate director and manager research, Morningstar Investment Research India.
VK Vijayakumar, chief investment strategist at Geojit Financial Services, said initial trends in FPI activity in June indicate buying in financial services, telecom and real estate, and selling in FMCG, IT, metals and oil & gas.
Moreover, as per depository institution data, FPIs invested Rs 10,575 crore in the debt market during the period under review.
Foreign investors have been investing in Indian government bonds consistently in 2024 except in April, with total investments standing at Rs 64,244 crore. India’s inclusion in the debt index will have a positive impact on debt inflows.
“Despite any short-term shifts in capital flows, we believe India will continue to remain an attractive long-term destination for global investors,” said Nimesh Chandan, chief investment officer at Bajaj Finserv Asset Management.
