Saturday, October 1, 2022

Foreign portfolio investors make largest investment after 20 months

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Foreign portfolio investors made their largest investments in 20 months, totaling Rs 51,204 crore, in the Indian equity market during the month of August, according to data from the National Securities Depository (NSDL).

During this, FPIs have changed to net buyers in Indian equity markets for two consecutive months through August and supported domestic indices to stay buoyant.

According to NSDL data, they were the net buyers in July, investing a total of Rs 4,989 crore in stocks.

The last time net foreign purchases were recorded was in September 2021.

According to data from the depository, they have already invested Rs 1,963 crore so far this month of September.

The recent return of foreign investments and the apparent plateauing of global inflation both contributed to the recent recovery in Indian equity markets.

The entire loss that investors suffered in 2022 was recovered because of the subsequent increase in stock indices.

From 7.01 percent in June to 6.71 percent in July, India’s headline retail inflation decreased, reaching its lowest point in five months. In the interim, US retail inflation also somewhat decreased, which encouraged investors to buy more.

Concerning FPI investments in India, up until the beginning of July, they had a nine- to ten-month selling streak going because of various macroeconomic factors.

A consistent outflow of money from Indian markets had been caused by the tightening of monetary policy in advanced economies, as well as the rise in demand for commodities priced in dollars and the strength of the US dollar. In times of significant market uncertainty, investors often favor stable markets.

The continuous currency devaluation and declining Indian foreign exchange reserves also had an impact on the negative market sentiments.

For the record, according to NSDL data, FPIs have sold off shares worth a total of Rs 159,202 crore so far in 2022.

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