FPIs start FY24 on bullish note, buying shares worth Rs 8,767 crore so far in April

Foreign portfolio investors (FPIs) started the new financial year buying Indian equities, according to National Securities Depository Ltd (NSDL) data.

FPIs purchased shares worth Rs 8,767 crore ($1.07 billion) on a net basis in the first half of April. They had been net buyers in the previous month too, but that was largely due to US boutique investment firm GQG Partners' $1.87 billion investment in four Adani Group companies in early March.

The benchmark Nifty 50 (.NSEI) slid 4.12 per cent between January and March this year, lowering its price-to-earnings ratio to 20.44 as of March 31, from 21.79 at the start of the year, as per NSE data.

FPIs sold equities worth Rs 37,632 crore in the previous fiscal, marking two straight years of net sales for the first time. The sales came after record purchases of Rs 2,74,032 crore in FY2021.

Analysts expected FPI flows to improve after the selling witnessed in the last two financial years.

"Foreign flows for the last two years have been negative. Rarely have foreign investors been aggressive sellers of Indian equities for three years in a row," G Chokkalingam, founder and head of research at Equinomics, said.

Aided by the FPI buying, the Nifty 50 rose 2.7 per cent in the first half of April.

PURCHASES AND SALES

After selling financial services shares worth Rs 29,993 crore in FY23, FPIs bought Rs 4,410 crore in the sector in the first half of April. Analysts said that easing risks of contagion in the global financial system and domestic lenders' strong growth prospects aided sentiment in the space.

Information technology saw renewed interest with foreign investors adding 10.02 billion rupees, while the auto segment also witnessed FPI buying.

The Nifty 50 is down nearly 2.79 per cent in 2023 so far, making domestic valuations attractive.

Broader markets have witnessed a sharper correction than the benchmark Nifty 50 with the smallcap index (.NIFSMCP100) losing 4 per cent in 2023 so far.

The steep fall in smallcap stocks also attracted domestic mutual funds, which bought over Rs 2,100 crore worth of equities in the segment in March.

With Reuters Inputs