FPIs have FOMO too
July marks another month of bumper foreign portfolio investor (FPI) inflows into Indian stock markets. On a net basis, FPIs bought Rs46,618 crore worth of Indian shares last month, according to the latest data, about the same as June’s figure of Rs47,148 crore.
This is also the fifth month in a row that Indian markets have seen net FPI inflows, with the numbers rising in most months. Broadly, there is a reversal evident from the trend last fiscal year when FPIs cashed out in a big way amid a sharp upturn in the US policy rate of interest.
The US central bank may not yet be done tightening monetary policy, but FPIs that were pulling out then have made quite a return. We could attribute it to the fear of missing out on India’s trend-beating equity gains.
Now that valuations again look inflated after a long rally, though, a correction that lets earnings catch up may be on the cards. Still, India Inc.’s profit potential looks healthy, and that should keep prices buoyed.
Of course, while some major shock could always upset the outlook, Indian stocks have plenty going for them right now. Resilient flows both from domestic and overseas investors support long bullish calls.
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