Foreign portfolio investors (FPIs) maintained their optimistic sentiment towards Indian equities in the first week of July and invested more than Rs 7,900 crore in the segment in the month so far as of July 5, 2024. During the same period, the investors poured in Rs 6,304 crore in the Indian debt market, official data with the depositories revealed.


This bullish outlook towards the equity market was driven by a robust economic and earnings growth momentum. In the year so far, the FPIs have now invested Rs 1.16 lakh crore in Indian equities, reported PTI citing the data.


Experts commented that the Union Budget and first quarter earnings for the 2024-25 fiscal year (FY25) will play a crucial role in determining the FPI flows ahead. The net inflow in July so far in equities stood at Rs 7,962 crore.


Elaborating on the flows, Milind Muchhala, Executive Director, Julius Baer India, said, “Some funds were probably waiting on the sidelines for the election event to be over. We believe that India remains an attractive investment destination amid a healthy economic and earnings growth momentum, and the FPIs cannot afford to ignore the markets for too long.”


V K Vijayakumar, Chief Investment Strategist, Geojit Financial Services, explained that the selling by FPIs in India was triggered by external factors such as increasing bond yields in the US and reduced valuations in other emerging markets. “When that situation changes, they again become buyers in India,” he added.


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Prior to the inflow, the investors poured in Rs 26,565 crore in equities in June, backed by political stability. Earlier in May, election concerns led to the investors dumping Indian equities worth Rs 25,586 crore, and further in April, investors withdrew more than Rs 8,700 crore from the segment.


With the latest infusion in the debt market, the segment has now seen an inflow of Rs 74,928 crore in the year so far. “The inclusion of Indian government bonds in the JP Morgan EM Govt Bond Index and the front running by investors have contributed to this divergence in equity and debt inflows,” Vijayakumar explained.