FPI inflows may stay volatile for a while
₹701.17 crore in the Indian markets on Monday. “While FIIs remained net buyers of Indian equities in July, overseas fund flows could be choppy this week as a depreciating currency against the dollar after the Fed’s interest rate hike by 25 bps can prompt them to offload their holdings in local equities," said Shrikant Chouhan, head of research, retail, Kotak Securities Ltd. Moreover, the Fed‘s indication of an additional rate hike amid the uncertain inflation trends may influence global investor sentiments, that may lead to fund outflow from emerging markets while bolstering investments in secure US bonds, said Chouhan In fact, FPIs had started curtailing positions a few days prior to the rate hike in anticipation of the Fed’s move, said analysts.
Ashwin Ramani, derivatives and technical analyst, SAMCO Securities, FPIs have been liquidating their long positions since 21 July after the Nifty hit an all-time high of 19,992 in the previous session. While fund flows have been volatile in the last few days, net investments in the month and so far in 2023 remain in the positive zone. Overall investments made by FPIs stood at ₹46,618 crore in July, showed NSDL data.
Since January, FPI invested ₹1.23 trillion ( ₹123,025 crore) in Indian equities, leading to a significant rise in the indices. The Sensex is up by over 15% since the March lows. Although volatility in fund flows will continue in the near term, experts said fundamentals are supportive and flows into India may continue.
Sufficient liquidity in India versus historical levels and also compared to other emerging markets has been attractive to the FPIs, experts added. India’s premium against its Asian peers had eased to seven-year mean levels. “Interest can moderate from
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