Foreign Portfolio Investors (FPIs) are returning to Indian equities after relentlessly selling over ₹ 2 trillion in the past nine months. However, they bought shares close to ₹ 5,000 crores in July and this has lifted market sentiments, and the Sensex escalated 8.5% in July after going through a contraction in the past three months.
Foreign investors continued their positive stance on Indian equities after turning net buyers last month. In the first week of August, they invested ₹ 14,175 crores amid the softening of the dollar index. This is significantly higher than their investments in July this year.
The recent correction in the Indian equity market has provided a good buying opportunity and FPIs have been taking advantage of it. FPIs have been buying in sectors like capital goods, telecom, FMCG, metals, construction and power.
FPIs have started investing in the automobile sector because it is picking up gradually as the semiconductor chip supplies are easing up. Further, they helped passenger vehicle volumes to improve sequentially in July.
They have also been in favour of the financial services sector. Analysts say that banks have been posting very strong growth in profitability, stable net interest margins and better asset quality. This could be a reason why they’ve been buying stocks in the sector.
Written by Simran Bafna
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