The government’s alterations in debt investment taxation have enhanced the appeal of investing in India for Foreign Portfolio Investors (FPIs), thereby contributing to the stability of the rupee. FPIs have shown a positive shift towards India since early July, with a total investment of Rs 5,155 crore through the secondary market as of July 10. Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd., noted that additional investments of Rs 10,001 crore in the ‘primary market and others’ category have brought the total investment during this period to Rs 15,156 crore, marking a positive trend.
A notable trend in FPI inflows into India is the increasing share of debt flows, with FPIs investing Rs 3,228 crore through the General Limit and Rs 6,619 crore through the Fully Accessible Route (FAR) in July. The improved macroeconomic conditions in India and the stability of the rupee have played a significant role in attracting FPI investments, according to analysts. Factors such as the chip trade weakness and FPIs divesting in markets like South Korea have also directed investments towards India, a trend that is expected to persist unless there are adverse geopolitical developments in West Asia.
Market performance last week saw a marginal decline after a four-week winning streak, influenced by escalating geopolitical tensions in West Asia and a surge in crude oil prices. Geopolitical factors, particularly tensions between Iran and the United States, were key drivers of market sentiment. The conflict led to a brief rise in Brent crude prices above $80 per barrel before settling around $76 by the week’s end, alleviating concerns over imported inflation and external sector risks, as highlighted by Ajit Mishra, SVP of Research at Religare Broking Ltd.
Sectoral performance remained mixed, with realty emerging as the top-performing sector, followed by IT and metals, driven by improved sentiment and selective buying. As the market enters the upcoming week, the focus will be on macroeconomic data releases, corporate earnings, and geopolitical developments to steer market sentiment.
