FPIs back to buying Indian equities? Data from last week indicates so

livemint.com:

₹11,730 crore last week (June 10-15), according to NSDL data. This shift marks a sharp contrast to the intense selling seen in the last couple of months.

In April, foreign investors were net sellers of ₹8,671 crore worth of equities, which increased to ₹25,586 crore in May.The influx of foreign funds amid renewed buying indicates growing confidence in the Indian market. This confidence is buoyed by improving macroeconomic indicators and positive policy expectations.

The foreign investments have provided a significant boost to already expensive markets, injecting liquidity and potentially fueling further gains in the equity markets.Indian markets experienced a sharp decline of nearly 6 percent on June 4 due to the 2024 Lok Sabha election results, which were tighter than expected, coupled with the BJP's performance not meeting exit poll predictions. However, following confirmation of the Modi-led NDA forming the new government, the markets swiftly rebounded, registering a significant recovery of over 4 percent in June thus far.Similarly, ahead of the elections, Foreign Portfolio Investors (FPIs) were largely selling off their holdings amid concerns that the BJP might secure fewer seats compared to 2019.

Additionally, global factors such as the outperformance of Chinese markets, a hawkish stance from central banks worldwide, and other global economic cues weighed on foreign investors' sentiments towards Indian equities.However, signs of policy continuity under NDA 3.0 were pivotal in reassuring FPIs. The recent uptick in buying activity reflects clarity on the political front, with the BJP-led NDA returning to power and pledging to maintain key policies.