August 7, 2024
New Delhi, India
FPI Investments
Foreign Portfolio Investors (FPIs) have significantly increased their investments in the Indian stock market, with notable inflows into the Information Technology (IT) sector. This article explores the details of FPI activities in July, including sector-wise inflows and outflows, and their impact on the Indian equity market.
FPI Inflows in July: In July, FPIs infused a total of ₹32,365 crore ($3.87 billion) into Indian equities, marking the second-highest monthly inflows in 2024. The highest FPI inflows this year were recorded in March at ₹35,098 crore, while June saw inflows of ₹26,565 crore.
Market Performance: The increased FPI activity led to a notable rally in the Indian stock market. The NSE Nifty 50 index gained 4%, and the BSE Sensex rose by 3.43% in July. This recovery follows withdrawals in April and May, which were influenced by prevailing uncertainties.
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Sector-Wise FPI Inflows:
- IT Sector:
- FPIs invested ₹11,763 crore ($1.40 billion) into the IT sector, representing the highest inflow since the implementation of a new sectoral classification in 2022.
- Metals and Mining:
- The sector witnessed FPI inflows of ₹7,310 crore.
- Automobile:
- Inflows amounted to ₹6,148 crore.
- Healthcare:
- The sector recorded inflows of ₹5,054 crore.
- Capital Goods:
- FPIs invested ₹4,927 crore, marking eighteen consecutive months of inflows.
- Telecommunication:
- The sector saw inflows of ₹3,138 crore for the fifth successive month.
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FPI Outflows:
- Financial Services:
- FPIs sold stocks worth ₹7,648 crore, with significant selling in the second half of July.
- Power:
- The sector experienced outflows of ₹3,796 crore.
Long-Term Trends: Over the past 12 months, the Capital Goods sector has seen the highest inflows, while Banking and Financial Services witnessed the highest outflows.
Asset Under Custody (AUC): The total Asset Under Custody (AUC) by FPIs increased to ₹74.59 lakh crore at the end of July, compared to ₹71.44 lakh crore at the end of June.
FPIs have shown a strong preference for sectors poised to benefit from domestic reforms and growth, such as technology and infrastructure, while approaching sectors vulnerable to global economic downturns with caution. The significant inflows into the IT sector and the outflows from Financial Services reflect this strategic shift.
Disclaimer:
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