Foreign Investors Pour ₹16,621 Crore into Indian Equities
By Market Desk
Overseas investors injected ₹16,621 crore into Indian equities in early August, marking the fourth consecutive fortnight of strong capital inflows, with financial services leading the surge.
Foreign investors demonstrated robust buying activity in the Indian equity market during the first half of August, extending their streak of capital inflows for the fourth consecutive fortnight.
- Net buying by foreign investors from August 1-15 totalled ₹16,621 crore across sectors, according to NSDL data.
- This follows more than ₹20,200 crore invested during July.
- The current run represents the strongest two-week purchase period since early February.
Financial services emerged as the top beneficiary, attracting substantial foreign capital after experiencing net selling in July.
Sectoral Preferences Emerge
- Financial services saw ₹6,535 crore in buying during the first half of August.
- Other sectors receiving significant inflows included automobiles & auto components, consumer services, healthcare, and information technology.
- IT stocks recorded buying for the third consecutive fortnight.
Conversely, the telecom, capital goods, power, and realty sectors registered the highest outflows from foreign investors. Out of 24 tracked sectors, 14 received inflows while nine experienced outflows.
Strategic Shifts and Valuations
Despite the Nifty index retreating nearly 500 points from its recent peaks due to rising bond yields, broader markets maintained resilience, remaining largely flat.
Pankaj Pandey, head of fundamental research at ICICI Direct, noted this performance indicates a strategic shift among Foreign Institutional Investors (FIIs), who appear to be favouring mid-cap names within key sectors.
Vikas Gupta, CEO at OmniScience Capital, stated that financial services offer clear growth visibility over the next 3-5 years and are significantly undervalued, positioning them as an attractive long-term pick for FPIs.
Gupta views IT as more of a tactical trading bet due to uncertainties surrounding manpower, revenues, and earnings predictability over a five-year horizon. Pandey added that positive inflows into IT suggest the worst of the downturn might be over for the sector.
The continued FPI allocation to India is an initial positive sign, indicating a potential turnaround in sentiment towards India and non-AI allocations, according to Gupta. FPI investments also propelled the Auto index to new all-time highs.