Buying spree continues: FPIs buy equity worth Rs 45,346 crore in August so far despite rising US bonds and dollar

The markets continued to witness the inflow of foreign portfolio investors so far in August, snapping the eight months outflow trend despite rising in US bond yields and Dollar. The foreign investors have snapped the six months outflow trend in 2022 and turned into buyers from mid-July.

The momentum increased sharply in August on the back of a robust recovery in the exchanges and they have bought equity worth Rs 45,346 crore through the stock exchange till August 26, 2022, as per NSDL data, Dr. VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services said.

The foreign investors were buyers in the cash market too on all days of August except three, the analyst added.

“FPIs are now buying stocks of financials, capital goods, FMCG, and telecom,” the Chief Investment Strategist at Geojit Financial Services said. He added that the fact that FPIs are buying in India even amidst a strengthening dollar is a reflection of their vote of confidence in the Indian economy.

FPIs pulled out a massive Rs 2,17,358 crore from the equities market from January to June this year. June saw the most selling in the year with an outflow of around Rs 50,203 crore in the market.

The ultra-hawkish stance of the US Fed at Jackson Hole is a short-term negative for equity markets, this might impact FPI flows in the short term, the market analyst said. The US markets post US Fed chair Jeremy Powell’s commentary slumped up to 3 per cent during Friday’s session.

“Powell sounded ultra-hawkish in his brief speech at Jackson Hole. The Fed chief warned of "some pain" ahead in the economy, Vijaykumar said, adding that this is an indication that the rate hike in September can be large (75 bps) despite reiterating that the rate hike decisions will be data driven.

Markets will be concerned about the tight monetary conditions persisting longer than expected, the analyst said and added further that the near-term impact on equity markets will be negative.