The Rupee is forecasted to gain strength in the upcoming weeks, potentially influencing foreign portfolio investors’ decisions. Analysts noted that the Nifty 500’s better-than-anticipated FY26 earnings growth of 15.6% is bolstering the market with fundamental support. Despite this positive outlook, concerns are rising due to the poor monsoon this year.
Recent data shows a shift in foreign portfolio investors’ actions since June 15. In the week ending June 19, FPIs purchased stocks for three days and sold for two days, resulting in a net equity purchase of Rs 3,386 crore. This change in FPI activity is attributed to the stability and gradual appreciation of the rupee, according to Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd.
The Indian rupee has rebounded significantly from its low of 96.96 against the dollar on May 20 to 94.34 as of June 19. Analysts anticipate substantial dollar inflows through FCNR B bonds in FY27, coupled with a decline in Brent crude prices to $80 levels, easing India’s Current Account Deficit financing in FY27.
Investor concerns have arisen regarding the concentration risk associated with investing in select stocks in South Korea and Taiwan. Despite this, the allure of artificial intelligence (AI) trade and the anticipated profitability of companies like Samsung, SK Hynix, and TSMC continue to make these stocks appealing. Consequently, FPIs may engage in buying these stocks during declines while potentially selling in the Indian market during rallies.
