Foreign portfolio investors (FPI) have injected over Rs 32,364 crore into Indian equities in July. This resurgence can be attributed to a stable political environment, ongoing economic reforms, and appealing market valuations within India.

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"FPI investment has been inconsistent recently alternating between buying and selling. This is in sharp contrast to the consistent buying by DIIs. Total FPI buying in equity in July stood at Rs 32,364 crore. In debt, FPIs invested Rs 22,363 crore in July. For CY 2024 total FPI investment in equity stands at Rs 35,565 crore," said V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Further, Foreign institutional investors (FIIs) sold Rs 12,756.26 crore in the cash segment this week, while their monthly buying activity amounted to around Rs 5,407.83 crore. Domestic institutional investors (DIIs) continued their buying streak, acquiring about Rs 23,486 crore in the cash segment in July, with purchases of Rs 17,226 crore in the cash segment this week alone.

"We have been seeing mixed activity by the FPIs in the recent past, with bouts of buying and selling, a trend which is likely to continue for some more time," said Milind Muchhala, Executive Director, Julius Baer India.

Muchhala added their activity will remain influenced by various factors, including the performance of the global equity markets, the movement of the dollar index, incremental geopolitical events, and opportunities in the Indian markets considering slightly elevated valuation levels. 

On a similar line, Dr. V K Vijayakumar said, "Going forward, there are some developments that can impact FPI flows. The sharp drop in job creation in the US and the rising unemployment indicates the rising possibility of a recession in the US, which, so far, the market has ruled out. The possibility of a rate cut by the Fed in September is very high. Consequently, the US 10-year bond yield has fallen sharply to 3.79 per cent."

Further, he believes that FPIs may think of pulling more money out of India since India is the most expensive emerging market now. The developments in the US economy and markets in the coming days will set the trend for FPI in August.

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