Foreign portfolio investors (FPIs) made their first monthly purchases of 2023 in March 7,936 crore in Indian equities. Although for most part of March, markets were under pressure after the failure of two US banks spread contagion fear in the banking system, FPIs are largely buyers driven by major block deals in Adani shares. The near term outlook of FY24 for FPIs looks positive as the higher valuations of Indian markets have improved significantly.
As per NSDL data, FPI inflows equities stood at 7,936 crore during March. it is compared to the outflow 5,294 crore in February and 28,852 crore respectively in January.
due to a mega block deal in Adani Group In early March, where GQG Partners rocked 15,446 crore in the group’s four stocks —- led the FPI inflows 13,540 crore in the overall market from March 1 to March 10.
But the banking transition that started after the failure of two banks in the US has made the market sentiment volatile and outflows have been registered from the FPI front.
According to Dr VK Vijayakumar, Chief Investment Strategist, Geojit Financial Services, FPIs have been consistent buyers in capital goods and have alternated between buying and selling in financial services. The continuous selling by FPIs since they turned buyers in the last few days seems to be coming to an end.
Overall in March, the Sensex fell 419.56 points or 0.71%, while the Nifty 50 declined 91.15 points or 0.52%.
Also, foreign institutional investors (FIIs) also made purchases. 1,997.70 crore in equity in March.
Going forward, Vijayakumar said, “The near-term outlook for FPIs looks more positive now. Even though Indian valuations remain relatively high, the recent market correction has made valuations slightly more reasonable than before.” “
According to Vijayakumar, an important factor is the impressive change in India’s CAD, which has improved significantly due to increased exports. “The CAD which was 4.4% in Q2 FY2023 has turned surplus in Q3 FY2023,” he added.
Hence, he added, “Going ahead INR is likely to remain stable. This may prevent FPIs from becoming aggressive sellers. FPIs becoming buyers in banking will help banking stocks to move higher aided by higher Q4 results “
Apart from equities, FPIs were sellers in the debt market 2,505 crore in March. he also took off 727 cr in loan-VRR instruments. In contrast, FPIs invested in hybrid instruments 1,195 crores.
Considering the above, FPIs are largely net buyers in the overall market in March 5,899 crores. compared to sales 4,139 crore in February and 26,544 cor in January.
Disclaimer: The views and recommendations given above are of individual analysts or broking companies and not of Mint. We advise investors to do due diligence with certified experts before making any investment decision.
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