In July, FPIs bought domestic equities worth Rs 32,365 crore, while in June it was net purchases of Rs 26,565 crore. In April and May, they sold equities worth Rs 8,671 crore and Rs 25,586 crore, respectively, resulting in net sales. In February and March, they bought net purchases of Rs 1,539 crore and Rs 35,098 crore. In January, they started the year on a negative note, selling equities worth Rs 25,744 crore.
On Friday, foreign institutional investors (FIIs) were net buyers of Rs 5,318.14 crore while domestic institutional investors (DIIs) were net buyers of Rs 3,198.07 crore.
FPI investments in equities have been declining steadily, with net inflows in August lower than in July. The underlying reason for the decline in interest is high valuations in the Indian market, said expert VK Vijayakumar, chief investment strategist at Geojit Financial Services.
“With Nifty now trading at over 20 times FY25 projected earnings, India is currently the most expensive market in the world. FPIs are prioritizing non-Indian markets as they have an opportunity to invest in much cheaper markets. A majority of the purchases being made by FPIs are through the ‘Primary Market & Others’ category. In the cash market, FPIs have been consistent sellers as valuations have been rising,” Vijayakumar said. FPIs are buying in the debt market primarily because the Indian rupee has been stable this year and this stability is expected to continue. Echoing similar views, Vaibhav Porwal, Co-founder, Deserve said FIIs are becoming cautious in investing in India as Indian equity market valuations have risen to relatively higher levels. They are selectively investing in defensive market segments, focusing on sectors such as healthcare and FMCG, he opined. With the US Federal Reserve expected to begin its rate cutting cycle in September and historically equity markets have benefited from rate cutting cycles in the US market, Porwal said he expects FIIs to shift focus to emerging markets and deploy capital where valuations are more attractive. However, he does not see India being a big beneficiary of these inflows.
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(Disclaimer: The recommendations, suggestions, views and opinions expressed by the experts are their own. They do not necessarily represent the views of the Economic Times)
