FPIs invest Rs 8,643 crore in equities in April on reasonable valuation of stocks

Foreign portfolio investors (FPIs) have infused Rs 8,643 crore in the Indian equity markets so far this month on the reasonable valuation of stocks, according to analysts.

FPIs infused a net sum of Rs 7,936 crore in equities in March mainly driven by bulk investment in the Adani Group companies by the US-based GQG Partners.

FPIs started the current financial year on a positive note and invested Rs 8,643 crore in Indian equities from April 3, data with the depositories showed.

The situation is generally favourable for economies like India in terms of FPI inflows, Himanshu Srivastava, Associate Director - Manager Research, Morningstar India, said.

Also, the valuation of Indian equities has come to a reasonable level following its consolidation, which prompted FPIs to invest in Indian stocks, he added.

Another market expert believes that valuations have become more palatable given almost zero NSE 50 returns over the last 17-18 months.

Apart from equities, FPIs have invested Rs 778 crore in the debt market during the period under review.

In terms of sectors, FPIs heavily bought financial stocks for Rs 4,410 crore during the fortnight that ended April 15. Besides, they were also buyers of automobiles and capital goods. In addition, IT stocks too saw buying interest, although marginally.

"There were huge delivery volumes in stocks like HDFC Bank, HDFC, and Tata Motors during the fortnight. It can be safely assumed that the bulk of this delivery buying was done by FPIs. FPIs have also increased their holding in ITC," VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services, said.

Stocks in which FPI holding is steadily rising are showing resilience even during market weakness.

"FPI inflows are likely to remain stable, going forward. Financials will continue to attract more inflows since the early Q4 results of the segment are very good," Vijayakumar said.

Overall, FPIs had pulled out a net sum of Rs 37,631 crore from Indian equities in 2022-23 on aggressive rate hikes by central banks globally and a record Rs 1.4 lakh crore in 2021-22. Before these outflows, FPIs invested a record Rs 2.7 lakh crore in equities in 2020-21 and Rs 6,152 crore in 2019-20.

In the financial year 2022-23, most of the major central banks started hiking the interest rate, which resulted in the departure of hot money from emerging markets including India. This resulted in an unprecedented rise in prices (Inflation) in most economies.

Apart from global monetary tightening, volatile crude, and rising commodity prices along with Russia and Ukraine conflict led to an exodus of foreign money in 2022-23.