FPIs invest Rs 1,210 crore in Indian markets in first 5 trading sessions of August

Overseas investors were net buyers to the tune of Rs 1,210 crore in Indian markets in the first five trading sessions of August on the back of domestic factors.

In equities, they invested Rs 975 crore during August 2-6, as per depositories data.

In the debt segment, foreign portfolio investors (FPIs) pumped in Rs 235 crore.

This took the total net investment during the period under review to Rs 1,210 crore.

In July, FPIs were net sellers at Rs 7,273 crore.

"Markets were buoyed by a set of domestic indicators such as recovery in PMI prints, lower unemployment rate in CMIE surveys and recovery in GST receipts, even as concerns over the third wave lingered in global markets,” said Shrikant Chouhan, executive vice president, equity technical research at Kotak Securities.

However, Himanshu Srivastava, associate director – manager research, Morningstar India pointed that this does not indicate a change in trend yet.

"Higher valuations, surge in oil prices and firmness in US Dollar have been keeping FPIs away from Indian equities. They have also been booking profits at regular intervals with markets trading near all-time highs,” he added.

"The return of FPIs has triggered renewed interest in large-caps,” noted VK Vijayakumar, chief investment strategist at Geojit Financial Services.

Overall, the MSCI Emerging Markets Index has gained 1.51 percent this week, Chouhan said.

All key emerging markets and Asian markets have seen FPI inflows in this month to date except Thailand.

Taiwan, South Korea, Indonesia and the Philippines saw month to date FPI inflows of $2,588 million, $1,722 million, $93 million and $8 million, respectively.

On the flip side, Thailand saw month to date FPI outflows of $182 million, he added.

Regarding future of FPI flows, Srivastava said India remains an attractive investment destination from the long-term perspective.

As the macro environment improves and domestic economy starts treading on the recovery path, FPI flows can be expected to rebound.

However, the risk of a potential third wave could be a deterrent for foreign investors.

Also, given high valuations, interim profit booking cannot be ruled out while dollar movement will also continue to impact foreign flows into the Indian equities, Srivastava said.