Foreign portfolio investors have stepped up their buying of Indian equities, attracted by signs of stronger economic growth and corporate earnings, despite persistent US bond yield pressures, signalling renewed confidence in India’s market prospects.
Foreign portfolio investors have stepped up buying of Indian equities as signs of firmer economic growth and healthier corporate earnings have improved the market’s appeal, even as elevated US bond yields continue to act as a brake on the pace of inflows. Through August 7, overseas investors bought Indian shares worth ₹12,920 crore, with ₹8,195 crore routed through stock exchanges and ₹4,125 crore coming via the primary market and other channels, according to market data cited by Free Press Journal.
Analysts told the newspaper that the buying has gathered momentum since July and has continued into August, with interest concentrated in automobiles, consumer durables and healthcare. Dr VK Vijayakumar, chief investment strategist at Geojit Investments, said those sectors have shown healthy earnings growth in the latest results season, while foreign investors have also remained active in mid-cap and small-cap stocks that are linked to domestic growth.
The trend fits a broader pattern seen in recent months. Mint reported that foreign investors put ₹10,690 crore into Indian equities in August 2023 even as they trimmed their pace from the previous month, while continuing to allocate to debt. In August 2024, Business Standard said inflows eased to ₹7,320 crore as high valuations and the unwinding of the yen carry trade weighed on sentiment. Sebi has also said net FPI flows across equity and debt reached a record ₹3.39 lakh crore in fiscal 2023-24, helped by India’s stronger growth, easing inflation and solid earnings.
For now, the near-term outlook remains balanced. Indian benchmarks ended the week higher despite volatility tied to the new closing auction session framework for futures and options stocks, the Reserve Bank of India’s policy decision and geopolitical uncertainty. The Sensex rose 0.52% to 78,499.17 and the Nifty gained 0.77% to 24,570.65, while broader markets outperformed. A US 10-year yield near 4.67% may still draw capital towards safer American debt, but stronger domestic fundamentals and an encouraging earnings season could keep foreign interest in Indian equities intact.
Disclaimer: This article is intended to inform and educate, not to recommend or endorse any financial product, investment or strategy. Please consider your own financial circumstances and seek professional advice where appropriate before making financial decisions.
