Foreign investors made a reverse turn in the market and adopted a positive stance towards the Indian equities market. The investors poured in more than Rs 1,500 crore in the equities in February, going against the prevalent outflows seen in the preceding months. This influx was attributed to the strong corporate earnings and economic growth.
Investors maintained their bullish outlook on the debt markets and infused over Rs 22,419 crore during the period under review, official data with the depositories revealed. The data revealed the inflow in equities at Rs 1,539 crore in February, after investors dumped equities worth Rs 25,743 crore in the preceding month, reported PTI.
Providing an outlook for March, Mayank Mehraa, smallcase manager and principal partner, Craving Alpha, said, “The outlook for FPI flow appears promising, provided the current economic trajectory and corporate performance sustain their positive momentum, potentially continuing to attract foreign investment into Indian equities.”
Mehraa attributed the trend reversal to strong corporate earnings and favourable economic growth trends seen during the October-December quarter. “Despite perceived stretched valuations in the previous month, the compelling performance of companies justified their value, enticing FPIs to re-enter the market,” he added.
Elaborating on the investor movements, Himanshu Srivastava, Associate Director - Manager Research, Morningstar Investment Research India, said, “Improvement in the global economic environment would have prompted FPIs to invest in high growth-oriented markets like India. Globally, the January inflation numbers in the US were in line with expectations. Though the prices moved up in January, the annual increase in inflation was the lowest in nearly three years, raising expectation of an early rate cut by US Federal Reserve. On the domestic front too, Q3 GDP data showed strong growth, thus attracting foreign investors.”
V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, noted that the inflow persisted despite the surge in the US bond yields with the 10-year yield coming up at 4.25 per cent. Sectorwise, FPIs emerged as major sellers in the financials and FMCG sectors.
Notably, foreign investors have been pouring in funds in the debt market in recent months after JP Morgan announced the inclusion of Indian government bonds in their index. The infusion of funds stood at Rs 22,419 crore in February, Rs 19,836 crore in January and Rs 18,302 crore in December.