Foreign Portfolio Investors Continue Buying Streak for Fifth Consecutive Day

Foreign investors have maintained their net buying position in Indian equities for the fifth straight session. Foreign portfolio investors (FPIs) purchased stocks worth Rs.314.5 crore, according to provisional data from NSE. Domestic institutional investors (DIIs) also remained net buyers for the second session, acquiring equities worth Rs.1,416.5 crore.

Inflows and Market Performance

This month, FPIs have invested a total of Rs.7,250.10 crore in Indian stocks. Year-to-date, FPIs have net purchased Rs.14,494 crore worth of equities, as per data from NSDL. India’s equity benchmark indices saw a sharp rebound, reaching record highs on Tuesday. The NSE Nifty 50 rose by 112.65 points (0.46%) to 24,433.20, while the S&P BSE Sensex increased by 391.26 points (0.49%) to 80,351.64.

Global Cues and Rally

The equity indices have extended their streak into the fifth consecutive week at this point, achieving milestones in early July. This extended rally, supported by positive global cues and foreign investor interest, mirrors a similar buying spree as last year by foreign investors that lasted 26 days until June 2, 2023.

Investor sentiment has been positive because of  India’s current account shifting to a surplus after ten quarters of deficits. The surplus for Q4FY24 was $5.7 billion (0.6% of GDP), compared to a deficit of $8.7 billion in the previous period.

Net Selling Shift

This renewed FPI interest follows two months of net selling, with May witnessing a $3 billion outflow and April just over $1 billion. The resumption of FPI buying has mitigated this year’s outflows, which had neared $5 billion post-election results. Historically, FPI selling has led to underperformance in bank stocks, especially private ones where FPIs have huge weight.

Conclusion: In conclusion, analysts anticipate continued FPI inflows, with the Nifty 50 potentially reaching 24,000-24,135 in the near term. Despite global challenges, the macroeconomic fundamentals and investor sentiment suggest a favorable outlook for Indian equities. Sustained inflows will be helpful to determine if this represents a long-term shift in foreign investor sentiment towards India. The current rally demonstrates the renewed confidence of FPIs in India’s growth story, positioning the market for further gains.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.