Equity Dominates FPI Investments in July, Exceeding Debt by 3.6x
July saw foreign portfolio investors (FPIs) maintaining their stance as net buyers, with a notable preference for equities over debt, marking this trend for the second instance within the year.
As per the latest NSDL data, investors have net purchased shares amounting to ₹15,352 crore up until July 12, cumulating to nearly ₹42,000 crore in net inflows. Looking at the broader picture for the year, net purchases have reached ₹18,553 crore, despite sales during January, April, and May.
Meanwhile, the debt market observed net purchases of ₹4,196 crore for the month, supplementing the ₹13,982 crore net bought in the preceding month. The year-to-date figures for debt purchases stand impressively at ₹82,082 crore, showcasing a 4.4 times surge compared to the inflows towards equities.
India’s stance in the global markets is also favorably changing, with it currently holding a 1 percent weightage in the JPMorgan EM Bond index, a figure set to incrementally rise to 10 percent over a ten-month span.
Manoj Purohit, a Partner and Leader at BDO India, indicated that the net FPI inflows have seen a positive turn this month across both equity and debt segments. The debt market, particularly, has experienced significant attention from European regions. Luxembourg has notably surpassed Mauritius, emerging as a favored jurisdiction for channeling funds into India via the FPI route, with Ireland also gaining attention due to its investor-friendly fund regime and tax-efficient structures.
The capital market’s swift recovery is credited to optimistic sentiments, assured continuance of reforms by a stable government, moderate US Federal rates, and robust domestic demand. Additionally, recent initiatives introduced in IFSC Gift City aiming at broadening participation for both foreign and Indian investors have strategically positioned India as a significant global investment destination.
The entrants of foreign players allocating a substantial fraction of their global portfolios towards Indian markets underscore the strategic shift and the attractive investment climate fostered by regulatory and policy reforms.
V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services, shared insights on the influence of global factors on FPI flows, hinting at erratic patterns. However, encouraging results from IT sector giants point towards potential Foreign Institutional Investment (FII) in stocks with rational valuations.
With the Union Budget announcement scheduled for July 23, the market is poised for new cues that will shape future investment landscapes. “As India enters Amritkaal, aiming to position itself as the third largest economy globally, the FPI community is expected to play a pivotal role in this journey,” concluded Purohit.
