In June, FPI became net buyers investing Rs 12,714 crore in Indian markets

After being net sellers for the previous two months, FPI (foreign portfolio investors) turned net buys in June, injecting a net Rs 12,714 crore into Indian markets.

Prior to this, foreign investors withdrew Rs 2,666 crore in May and Rs 9,435 crore in April. FPI invested Rs 15,282 crore in stocks between June 1 and June 25, according to depositories data. Simultaneously, FPIs withdrew Rs 2,568 crore from the debt market. During the review period, the total net inflow was Rs 12,714 crore.

According to Sanjiv Bajaj, Joint Chairman and MD of Bajaj Capital, the influx in June is due to favourable global cues and improved prospects for the Indian economy despite a dramatic reduction in the number of COVID-19 cases, relaxation of lockdown restrictions in some regions, and a pick-up in vaccination.

He said that a regular monsoon, supportive monetary policy, a deleveraged corporate balance sheet, and a well-capitalized banking system may lead to a ‘V’-shaped growth resurgence in India.

According to V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, high delivery volumes in IT (information technology) and metal equities imply significant institutional purchasing.

Shrikant Chouhan, Executive Vice President (Equity Technical Research) at Kotak Securities, stated that the MSCI Emerging Markets Index gained almost 1.49 percent this week. With the exception of India and Indonesia, all important developing and Asian markets have experienced FPI outflows this month, he added.

FPI inflows into Indonesia amounted USD 363 million month to date. Taiwan, South Korea, Thailand, and the Philippines, on the other hand, experienced month-to-date FPI outflows of USD 2,426 million, USD 1,218 million, USD 124 million, and USD 64 million, respectively, he added.

“From the long-term perspective, India would attract foreign investments as the macroeconomic environment improves and domestic economy starts treading on the recovery path” stated Morningstar India Associate Director (Manager Research) Himanshu Srivastava.

So far, global central banks’ ultra-loose monetary policy stance to assist the economy in the aftermath of the coronavirus epidemic has opened floodgates of foreign money into emerging economies like India, he noted.

The US Federal Reserve’s hawkish remark, on the other hand, dampened emotions and caused international investors to be cautious, he added.

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