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Positive Shift in Foreign Portfolio Investment Inflows Amid Recent Developments

Foreign Portfolio Investment (FPI) in the Indian equity market has turned positive in June, marking a significant change in investor sentiment

June’s Net Inflow and Year-to-Date Overview

As of June 21, FPIs injected Rs 12,170 crore into the equity market for the month, reversing earlier negative trends. However, the overall net investment for 2024 remains negative, with Rs 11,194 crore withdrawn.

Influence of Recent Election Results

The shift in FPI behavior since June 10 is attributed to the outcomes of recent elections, influencing investor confidence positively.

Factors Driving Positive Inflows

Sunil Damania, Chief Investment Officer at MojoPMS, identifies three primary factors driving the recent influx: government continuity fostering ongoing reforms, economic slowdown in China impacting global markets, and FPIs seizing opportunities in specific market transactions.

Contrast with Previous Months

May and April saw substantial FPI outflows, with Rs 25,586 crore and Rs 8,671 crore withdrawn, respectively, creating cautious market conditions.

Concentrated Inflows and Valuation Concerns

Experts observe that current FPI inflows are concentrated in select stocks rather than broadly across sectors, with concerns over high market valuations potentially limiting further investments.

Future Outlook and Considerations

FPI sentiment remains cautiously optimistic, contingent on economic indicators, government policies ahead of the budget, and global economic stability.

Strategic Monitoring and Investment Approach

Foreign investors are closely monitoring economic indicators and government actions, adjusting investment strategies accordingly amidst evolving global and domestic conditions.

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