FPIs Pour Rs 43,804 Crore Into India In July

As of July, foreign portfolio investment (FPI) flows into India remain strong and consistent. Among emerging markets, India stands as the largest recipient of FPI flows year-to-date, as reported by V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.

Up until 21 July, FPIs have invested a total of Rs 43,804 crore in India, covering various channels such as stock exchanges, primary markets, and bulk deals.

The FPIs' investment focus continues to centre on sectors like financials, automobiles, capital goods, realty, and FMCG. Their buying activity in these sectors has significantly contributed to the surge in stock prices, propelling both the Sensex and Nifty to record highs.

However, there is growing concern over the rising valuations. High valuations may pose a risk, as negative triggers could potentially lead to sharp corrections, as evidenced by the recent dip in the Sensex following negative news from Infosys and HUL.

On a positive note, the weakening of the US Dollar Index (DXY), which fell below USD 100 for the first time since April 2022, has led to an appreciation of the Indian Rupee. As a result, there has been increased fund flow from Foreign Institutional Investors (FII) and FPIs into the Indian market, contributing to its surge.

The market's volatility, as measured by the India VIX, has decreased, reaching its lowest closing level since December 2019. This decline in volatility signals reduced fear in the market and indicates that investors have adopted a risk-on approach.

Overall, the market structure appears promising, with a formation of higher highs and higher lows evident on the charts, coupled with stability in volatility. This stability allows market participants to assess potential gains and losses more accurately over time.