“FII flows will remain erratic, affected by global factors. The better-than-expected results of IT companies that have come out with results so far indicate the potential for FII buying in these stocks where valuations are not too high,” said Dr. V.K. Vijayakumar. Geojit Financial Services said.
While domestic investors led by mutual funds have been consistent buyers throughout the months of calendar year 2024, FIIs have alternated between buying and selling.
“FIIs were sellers in January, April and May (cumulative selling of Rs 60000 crore) and buyers in February, March and June (cumulative buying of Rs 63200 crore). The reason for this difference is that FII activity is influenced by external factors. US bond yields and valuations in other markets while DII activity is largely driven by local trends in the market,” Vijayakumar said.
One of the main reasons behind the continued rally in the Sensex and Nifty is high participation by FIIs which ended in the green for the sixth consecutive week to end at a new record high on Friday.
The Q1 earnings season has also started on a good note with TCS performance surprising the street with a 4.5% jump in the Nifty IT index in a single day.
“The rapid recovery in the capital markets can be attributed to positive sentiments, steady government assurances on the continuation of reforms, soft US Fed rates and strong domestic demand. Recent announcements at the IFSC gift city for foreign and broader partnerships. Indian investors have also given international players significant exposure to their global portfolios. The share is diverted to Indian markets,” said Manoj Purohit of BDO India.
All eyes are on the much-awaited budget proposals to be presented on July 23.
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