Political stability, aggressive retail buying force FPIs to turn buyers in India

MUMBAI: Political stability and sharp rebound in markets aided by aggressive retail buying have forced the foreign portfolio investors (FPIs) to turn buyers in India, market watchers said on Saturday.

FPIs have invested Rs 26,565 crore in equity in June which marks a reversal of their strategy of selling in the two preceding months.

According to market experts, FPIs have realised that selling in the most-performing market would be a wrong strategy.

"FPI buying can sustain provided there is no sharp up move in US bond yields," they added.

First fortnight data in June from the National Securities Depository Limited (NSDL) shows FPIs buying in realty, telecom and financials.

FPIs were sellers in IT, metals and oil and gas and are likely to continue the buying trend in financials.

According to V. K. Vijayakumar, Chief Investment Strategist, Geojit Financial Services, India's inclusion in the JP Morgan Bond Index is certainly positive.

"The debt inflows for 2024 so far stand at Rs 68,674 crore. In the long term, this will reduce the cost of borrowing for the government and reduce the cost of capital for corporates. This is positive for the economy and therefore for the equity market," he noted.

FPIs are selling where valuations are high and buying where valuations are reasonable. Analysts believe that FPI inflows will remain constrained due to the high valuations currently commanded by the Indian equity market.