FPIs' investment value gains 20% to $626 billion in June quarter

livemint.com:

equity market capitalisation marginally to 17.33% for the quarter under review from 17.27% for the March quarter. After pulling out funds to the tune of $3.2 billion from the Indian equities in the March quarter, FPIs took a sharp U-turn in the three months ended June and made a strong comeback with a net investment of $12.5 billion, the report said. "The flows were largely driven by the prospects of interest-rate direction in the US, how the global inflation numbers were shaping up, and China's economic woes, along with domestic indicators.

The sentiments broadly remained positive throughout the quarter," the report noted. It was a positive start of the quarter with apprehensions about the banking crisis in the US and Europe fading. Also, there were expectations building that the US Federal Reserve will most likely slow its pace of rate hikes in future, which augured well for foreign money to flow into the Indian equity markets, the report noted.

Additionally, Indian markets also witnessed some consolidation towards the end of the previous quarter, leading to some rationalisation in its valuations. Besides, the resilience of the domestic economy amid uncertain times also prompted FPIs to turn their focus back on Indian stocks. FPIs were net buyers in April, May, and June.

Since then, there has been no stopping by FPIs as they continued to invest substantially into the Indian equity markets in July, as well as so far in August. However, there were a few challenges, which did reduce the pace of flows. They adopted a cautious approach on the back of global credit ratings agency Fitch downgrading the credit rating for the US to AA from AAA, thus denting sentiments.