News

Published: May 15, 2023
Updated: May 15, 2023

Strong Earning Season Drives Foreign Portfolio Investors (FPIs) to Invest Rs 23,152 Crore in May

Robust Investment by Foreign Investors in Indian Equities

Foreign investors have displayed significant interest in Indian equities during May, with investments exceeding Rs 23,152 crore in the first half of the month. This surge in investment can be attributed to several factors, including the expectation of no further rate hikes by the US Federal Reserve, a positive domestic macro outlook, and a successful earning season.

FPIs Become Net Buyers in 2023

As a result of the recent investments, Foreign Portfolio Investors (FPIs) have become net buyers of equities in 2023, attracting Rs 8,572 crore. This trend is likely to continue throughout the month due to the ongoing global risk-on sentiment, supported by positive macro data such as the US non-farm payroll numbers and CPI numbers aligning with market estimates.

Favourable Factors like strengthening rupee ; strong macroeconomic conditions conducive for Continued Inflows

The strength of the rupee and expectations of a decline in the US dollar in the near term are factors that are likely to encourage FPIs to continue investing in India. Furthermore, the improved macroeconomic indicators in India contribute to the positive sentiment and favor continued inflows.

Strong FPI Investments in Indian Equities

Data from the depositories reveals that FPIs invested a net sum of Rs 23,152 crore in Indian equities during May 2-12. This follows a net infusion of Rs 11,630 crore in April and Rs 7,936 crore in March. It is important to note that the March investment was mainly influenced by bulk investments in Adani Group companies by GQG Partners, a US-based firm.

Stable Environment and Positive Outlook

The intervention by governments globally has contributed to stability in US regional banks, leading to a risk-on environment and improved FPI flow. The expectation of no further rate hikes by the US Federal Reserve, along with a strong domestic macro-outlook and a successful earning season, has attracted foreign investors to Indian markets.

Rupee Strength and Rational Valuations

The strengthening of the rupee against the dollar has provided support for FPIs' buying activities. Additionally, recent market volatility and occasional corrections have led to more rational valuations, making investment opportunities more appealing.

FPI Investments in Debt Market and Preferred Sectors

Apart from equities, FPIs have also invested Rs 68 crore in the debt market during the first half of May. Financials remain the favoured sector for FPIs, while capital goods and automobiles have also attracted their investments.

Optimistic Outlook for FPI Inflows

The strong earning season, along with positive macroeconomic indicators and a stable global environment, has attracted significant FPI investments in Indian equities. The anticipation of no further rate hikes by the US Federal Reserve, the strength of the rupee, and rational valuations further support the inflow of foreign investments. This trend is expected to continue, leading to continued growth and stability in the Indian market.