In June, the Sensex reached almost 2,171.45 points.
This positive trend can be attributed to a shift in FPI policy, marked by a “Buy India, Sell China” approach.
In a boost to the Indian economy, the month of June has witnessed a significant surge in foreign portfolio investments (FPIs). With an impressive inflow of Rs 47,148 crore into Indian equity, it marks the highest influx recorded in the past 10 months. This substantial investment from foreign investors serves as a testament to the robust macroeconomic fundamentals of the country, further bolstering its position on the global financial stage. In this article, we delve into the details of this remarkable development and explore its implications for India’s economic growth and stability.
Mayank Mehra, principal partner at Craving Alpha, stated that the inflow will be subdued in July whereas FPI investment was Rs 11,631 crore in April 2023 and Rs 7936 crore in March. On the other hand, VK Vijaykumar, Chief Investment Strategist, at Geojit Financial Services stated that FPI may turn out to be a bit cautious for a shorter period as the valuation of the country is rich. In June, the Sensex reached almost 2,171.45 points, or 3.4%, whereas the Nifty had zoomed by 654.94 points or 3.5%.
Associate Director Himanshu Srivastava stated that the sentiments have increased after the US Federal Reserve put a hold on its rate hike cycle, making the flow to emerging nations. The other possible factor is China’s economic recovery. FPI will continue to invest in sectors like financials, automobiles, and capital goods.
The Foreign Portfolio Investors (FPIs) have showcased a bullish sentiment towards the Indian market, propelled by various factors such as favourable domestic macros, a subdued global economic outlook, and the ongoing monsoon season. Alongside their substantial investments in Indian equities, FPIs have also demonstrated a keen interest in the debt market, with an infusion of approximately Rs 9,200 crore in June alone.
This positive trend can be attributed to a shift in FPI policy, marked by a “Buy India, Sell China” approach, which has fueled the continuous flow of investments into the country. While the magnitude of these inflows may fluctuate based on global developments, the prospect of an earlier interest rate reversal in India is expected to sustain FPI interest in the country as well as other emerging economies. Notably, the current scenario reflects a broader trend of global capital seeking attractive returns and signifies the confidence of FPIs in India’s economic prospects. As India continues to strengthen its position as an investment destination, the sustained inflow of FPIs bodes well for the country’s financial stability and growth trajectory.
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