Following general election results, foreign investors have injected Rs 12,170 crore into Indian equities in June, driven by expectations of sustained economic growth and policy reforms. This surge follows a net withdrawal of Rs 25,586 crore in May due to election-related uncertainties and over Rs 8,700 crore in April amid concerns over India’s tax treaty changes with Mauritius and rising US bond yields.

Despite the recent inflow, the total outflow for 2024 stands at Rs 11,194 crore as of June 21, according to depositories’ data. Sunil Damania, Chief Investment Officer at MojoPMS, noted that high valuations of Indian equities may limit future inflows, keeping FPIs cautious.

Excluding March’s significant inflow of Rs 35,000 crore, FPIs have consistently withdrawn funds from Indian markets in 2024. The general election results, despite delivering a weaker-than-expected mandate, reassured investors by ensuring government stability and policy continuity. Kislay Upadhyay of FidelFolio emphasized that markets celebrated the formation of a stable government, bolstering confidence.

Damania attributed the recent inflow to ongoing reforms, a slowdown in the Chinese economy, and FPI participation in select block deals. Himanshu Srivastava of Morningstar noted that the anticipation of a pro-growth budget has buoyed investor sentiment. Early FPI activity in June shows buying in financial services, telecom, and realty sectors, while selling in FMCG, IT, metals, and oil and gas sectors.

FPIs also invested Rs 10,575 crore in the debt market during the review period, contributing to a total investment of Rs 64,244 crore in 2024. Nimesh Chandan of Bajaj Finserv Asset Management affirmed India’s attractiveness as a long-term investment destination.

Source: ZEE Business