Foreign portfolio investors (FPIs) have remained net buyers in Indian stock markets for the fifth straight month, according to data from the National Securities Depository
Our Bureau
Mumbai/New Delhi
There is nothing that seems stopping the current rally in Indian stock indices even as several analysts lately have been pointing to high stock valuations.
The indices touched yet another fresh high on Wednesday morning and the benchmark Sensex was just at a touch short of 67,000 mark. Sensex was 0.3 per cent higher at 66,992 points and Nifty 0.2 per cent higher at 19,793 points at the time of writing this report. In the past one-month, they cumulatively gained about 6 percentage points.
Several analysts have pointed out that any further rally from the current levels is unlikely as valuations are higher. The consistent inflow of foreign portfolio funds, firm economic outlook, firm global markets, and a relative moderation in inflation contributed to the latest bull run in Indian stocks.
“The market continues to be resilient supported by favorable global set-up and sustained FII inflows. It is important to understand that the ongoing global market rally is primarily driven by the strength of the US economy, which is, so far, showing no signs of recession that the markets had feared and discounted in 2022. The recent corporate results from the US have been better-than-expected enabling continuation of the rally,” said VK Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Considering what he termed as high valuations, Vijayakumar added investors may consider some profit booking “if that helps in the realization of some planned financial goals.”
But Indian stock indices traded marginally lower Thursday morning, primarily due to profit booking after the latest bull run.
Sensex and Nifty were 0.2 per cent lower. The indices touched yet another fresh high yesterday and the benchmark Sensex in the process crossed the 67,000 mark. All the Nifty sectoral indices were in the green, with Nifty bank, Nifty financial services, Nifty media, Nifty PSU bank, Nifty consumer durables, and Nifty oil and gas rising the most.
In the past month, the indices – Sensex and Nifty — cumulatively gained about 6 percentage points.
Several analysts have pointed out that any further rally from the current levels is unlikely as valuations are higher.
The consistent inflow of foreign portfolio funds, firm economic outlook, firm global markets, and a relative moderation in inflation contributed to the latest bull run in Indian stocks.
Foreign portfolio investors (FPIs) have remained net buyers in Indian stock markets for the fifth straight month, according to data from the National Securities Depository (NSDL).
FPIs bought Indian stocks worth Rs 7,936 crore, Rs 11,631 crore, Rs 43,838 crore, and Rs 47,148 crore in March, April, May, and June, respectively. The trend is also firm in July as they bought Rs 36,971 crore worth of equities.
Foreign portfolio investors (FPIs) have remained net buyers in Indian stock markets for the fifth straight month, according to data from the National Securities Depository (NSDL).
The foreign funds making their way into Indian stocks buoyed the broader market as the indices have been touching their respective fresh peaks every now and then. Notably, Sensex today too touched its all-time high of 66,311 points.
The latest fund inflows started after the recent banking crisis in the US, leading to the Silicon Valley Bank’s closure, among others, in March. Also, India’s strong economic outlook, as forecasted by various global agencies, seemed to have made a renewed appetite for domestic stocks.
One of the most prominent lenders in the world of technology startups, Silicon Valley Bank, which had been struggling, collapsed on March 10, after a run on the bank by the depositors. Its closure led to a contagion effect and the subsequent shutting down of other banks.
Notably, in January and February, FPIs sold equities worth Rs 28,852 crore and Rs 5,294 crore, respectively. NSDL data showed. Foreign investors were apparently cautious amid risks from the then-volatile financial markets.
Barring some exceptions including the current one, foreign portfolio investors (FPIs) had been selling equities in the Indian markets for over a year, which started in October 2021 for various reasons.
In 2022, foreign portfolio investors sold Rs 121,439 crore worth of stocks in India on a cumulative basis, the data available on the NSDL website showed.
Tightening monetary policy in advanced economies including rising demand for dollar-denominated commodities, and strength in the US dollar had then triggered a consistent outflow of funds from Indian markets. Investors typically prefer stable markets in times of high market uncertainty.
