FPI investments in equities turn net positive in June
Foreign Portfolio Investors (FPIs) have turned net buyers so far in June as equity markets stabilised post-poll volatility, driven by an upgraded GDP growth forecast and US Federal Reserve continuing to hold interest rates higher for longer.
FPI net inflow stood at ₹22,834 crore on June 21, of which ₹10,922 crore was in equity and ₹9,634 crore was in debt. This is the first time in 3 months when investments into equities have turned positive. FPIs had net sold equities worth ₹25,586 crore in May and ₹8,671 crore in April 2024. “Indian equities saw buying from FII’s this week. The market participants will keep an eye on further progress of the monsoon. Food inflation in May 2024 was at 8.7 per cent. Healthy crop outlook would be important towards controlling food inflation. In the near term, Indian equity market would continue to track domestic macro data and global markets. Going ahead, focus will gradually shift towards budget and Q1FY25 earnings,” said Shrikant Chouhan, Head Equity Research, Kotak Securities
In the debt market, FPIs net inflows have reached ₹64,244 crore so far this year since January.
Govt bonds inclusion
Analysts said the inclusion of government bonds to JPMorgan and Bloomberg debt indices had especially triggered foreign fund inflows into debt markets. Upon inclusion, India will have the single highest duration across the index (at 7.03 years vs Emerging Market/EM Asia’s 5.97 years), with an above-average yield-to-maturity (at 7.09 per cent vs EM Asia’s 3.98 per cent), per JP Morgan’s Global Emerging Markets Research.