Foreign Investors Step Up India Buying, Stronger GDP & Earnings Outlook Could Sustain FPI Inflows
· Free Press Journal
Mumbai: Foreign portfolio investors (FPIs) are expected to continue buying Indian equities as improving economic growth and corporate earnings strengthen the country's investment appeal, analysts said.
The buying momentum, which gathered pace in July, has continued into August, although elevated US bond yields could limit the scale of foreign inflows.
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Inflows Continue
Through August 7, FPIs purchased Indian equities worth Rs 12,920 crore. Of this, Rs 8,195 crore came through stock exchanges, while Rs 4,125 crore was invested through the primary market and other categories.
Foreign investors also continued putting money into the debt market through the Debt General limit.
Sector Preference
Dr VK Vijayakumar, Chief Investment Strategist at Geojit Investments Ltd, said FPIs have shown a preference for sectors including automobiles, consumer durables and healthcare.
The Q1 FY27 results from these sectors have also indicated healthy earnings growth, supporting increased foreign investor interest.
FPIs have additionally continued investing in growth-oriented mid-cap and small-cap stocks across sectors.
Growth Support
Analysts expect improving prospects for India's GDP and corporate earnings growth to support continued foreign investment.
Rupee Falls 18 Paise To Close At 95.34 Against US Dollar Amid Dollar Demand And FII OutflowsHowever, high bond yields in the United States remain an important challenge. The US 10-year bond yield is around 4.67 per cent, potentially attracting global capital towards relatively safer US debt assets and limiting stronger FPI flows into India.
Indices Gain
Indian equities ended the week with modest gains despite volatility triggered by the rollout of the new Closing Auction Session framework for futures and options stocks, the Reserve Bank of India's monetary policy decision and geopolitical uncertainties.
The Sensex gained 0.52 per cent during the week to close at 78,499.17, while the Nifty rose 0.77 per cent to 24,570.65.
Broader indices outperformed, with mid-cap and small-cap indices gaining 0.81 per cent and 2.61 per cent, respectively.
FIIs Exit Big But Quietly Bet On 120 Stocks — Are Smart Investors Seeing What Others Miss?Week Ahead
Indian equities enter the coming week with a balanced outlook. Resilient domestic fundamentals, stable monetary policy and an encouraging start to the corporate earnings season could provide support, while global bond yields and geopolitical developments remain key risks.