In July, FPIs bought domestic shares worth Rs 32,365 crore while in June, they were net buyers at Rs 26,565 crore after remaining net sellers in April and May when they sold equities worth Rs 8,671 crore and Rs 25,586 crore respectively. In February and March they were net buyers at Rs 1,539 crore and Rs 35,098 crore after starting the year on a negative note in January when they offloaded shares worth Rs 25,744 crore.
On Friday, the foreign institutional investors (FIIs) were net buyers at Rs 5,318.14 crore while the domestic institutional investors (DIIs) were net buyers at Rs 3,198.07 crore.
FPI investment in equity is steadily coming down with net investment in August down from July and the fundamental reason for the fading interest is the high valuation in the Indian market, expert V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services said.
“With Nifty now trading at above 20 times estimated FY 25 earnings, India is the most expensive market in the world now. FPIs have opportunities to invest in much cheaper markets and, therefore, their priority is markets other than India. Bulk of the buying that FPIs are doing are through the ‘primary market and others’ category. In the cash market they have been consistent sellers because of the elevated valuations,” Vijayakumar said.FPIs are buying in the debt market mainly because the INR has been stable this year and this stability is expected to continue, he added.Echoing similar sentiment, Vaibhav Porwal, Co-founder at Dezerv said that the valuations in the Indian equity market have risen to relatively high levels, leading FIIs to exercise caution when investing in India. They have been selectively investing in defensive market segments, focusing on sectors such as healthcare and FMCG, he opined.With the US Fed expected to start its rate cut cycle in September, historical equity markets have benefitted from rate cut cycles in the US market, Porwal said, anticipating that FIIs will shift their focus to emerging markets, deploying capital where valuations are more appealing. Though he does not see India being a significant beneficiary of these flows.
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