As risk sentiment improved and oil prices steadied, foreign investors invested slightly more than Rs51,200 crore in Indian equity markets in August, the highest sum in 20 months.
Foreign portfolio investors (FPIs) made a net investment of almost Rs5,000 crore in July, according to depositories’ data. Following nine months of huge net outflows that started in October of the previous year, FPIs resumed making purchases in July. Between October 2021 and June 2022, they withdrew Rs2.46 lakh crore from the Indian equity markets.
Manish Jeloka, Co-head of Products and Solutions at Sanctum Wealth, said that FPI flows to India will continue this month as well, but more slowly than in August due to the US Federal Reserve’s continuous rate hikes and quantitative tightening. Arpit Jain, Joint Managing Director of Arihant Capital Markets, claims that factors affecting FPI flows would include interest rates, dollar pricing, and inflation.
According to depositories’ data, FPIs made a net investment of Rs51,204 crore in Indian equities during the month of August. This was the biggest investment by foreign investors since December 2020, when they made a net investment of Rs62,016 crore in equities.
Commodity prices fell and currency markets stabilized as China’s economy and banking sector suffered, according to TradeSmart chairman Vijay Singhania. “As interest rates flattened and oil prices stabilized, international investors started pouring money into emerging nations,” he said.
Jain claims that despite a strong dollar and increasing bond rates, FPIs are still making purchases due to the correction in Indian stocks as well as falling oil and commodity prices, especially those for steel and aluminum. US inflation dropped from a 40-year high in June to 8.5% in July as a result of falling fuel prices. Food prices are falling, which has caused India’s consumer price index-based retail inflation to modestly decline from the 7.01 % recorded in June to 6.71 % in July.
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