In July, FPIA raised Rs. 32,365 crore worth of local stocks while in June they bought Rs. 26,565 crore were net buyers while in April and May they were Rs. 8,671 crore and Rs. 25,586 crore worth of shares were sold. In February and March they paid Rs. 1,539 crore and Rs. 35,098 crore were net buyers after starting the year on a negative note in January when they bought Rs. 25,744 crore worth of shares were offloaded.
On Friday, foreign institutional investors (FIIs) raised Rs. 5,318.14 crore were net buyers while Domestic Institutional Investors (DIIs) accounted for Rs. 3,198.07 crore were net buyers.
VK Vijayakumar, chief investment strategist, Geojit Financial Services, said FPI investment in equities has been on a steady decline from July to August with net inflows and the main reason for the drop in interest is higher valuations in the Indian market.
“With the Nifty now trading above 20 times FY25 estimated earnings, India is now the world’s most expensive market. FPIs have opportunities to invest in much cheaper markets and, therefore, their priority is markets outside India. Most of the buying FPIs are doing is They have been consistent sellers due to elevated valuations in the cash market, which occurs through the ‘primary market and others’ category,” Vijayakumar said.
FPIs are buying into the debt market as the INR has been stable this year and this stability is expected to continue, he added.
Echoing a similar sentiment, Deserve co-founder Vaibhav Porwal said that valuations in the Indian equity market have reached relatively high levels, making FIIs cautious while investing in India. They are selectively investing in defensive market segments with a focus on sectors such as healthcare and FMCG, he opined.
With the US Fed expected to begin its rate cut cycle in September, historical equity markets have benefited from the rate cut cycle in the US market, Porwal said, adding that FIIs will shift their focus to emerging markets, where valuations are more attractive. However, he does not see India as a significant beneficiary of these flows.
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